Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method

On the first day of its fiscal year, Jacinto Company issued $22,200,000 of five-year, 5% bonds to finance its operations of producing and selling home improvement products. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 6%, resulting in Jacinto Company receiving cash of $21,253,059.

a. Journalize the entries to record the following:

1. Issuance of the bonds.
2. First semiannual interest payment. The bond discount amortization is combined with the semiannual interest payment.
3. Second semiannual interest payment. The bond discount amortization is combined with the semiannual interest payment.

If an amount box does not require an entry, leave it blank. Round your answers to the nearest dollar.

1.		fill in the blank bf1ac8080045fc4_2	fill in the blank bf1ac8080045fc4_3
		fill in the blank bf1ac8080045fc4_5	fill in the blank bf1ac8080045fc4_6
		fill in the blank bf1ac8080045fc4_8	fill in the blank bf1ac8080045fc4_9
2.		fill in the blank bf1ac8080045fc4_11	fill in the blank bf1ac8080045fc4_12
		fill in the blank bf1ac8080045fc4_14	fill in the blank bf1ac8080045fc4_15
		fill in the blank bf1ac8080045fc4_17	fill in the blank bf1ac8080045fc4_18
3.		fill in the blank bf1ac8080045fc4_20	fill in the blank bf1ac8080045fc4_21
		fill in the blank bf1ac8080045fc4_23	fill in the blank bf1ac8080045fc4_24
		fill in the blank bf1ac8080045fc4_26	fill in the blank bf1ac8080045fc4_27

b. Determine the amount of the bond interest expense for the first year. Round your answer to the nearest dollar. $fill in the blank 4c7be7044f95f9f_1

c. Why was the company able to issue the bonds for only $21,253,059 rather than for the face amount of $22,200,000? The market rate of interest is the contract rate of interest.