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

On the first day of its fiscal year, Jacinto Company issued $10,400,000 of five-year, 8% 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 10%, resulting in Jacinto Company receiving cash of $9,596,904.

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 f55565fcafec048_2	fill in the blank f55565fcafec048_3
		fill in the blank f55565fcafec048_5	fill in the blank f55565fcafec048_6
		fill in the blank f55565fcafec048_8	fill in the blank f55565fcafec048_9
2.		fill in the blank f55565fcafec048_11	fill in the blank f55565fcafec048_12
		fill in the blank f55565fcafec048_14	fill in the blank f55565fcafec048_15
		fill in the blank f55565fcafec048_17	fill in the blank f55565fcafec048_18
3.		fill in the blank f55565fcafec048_20	fill in the blank f55565fcafec048_21
		fill in the blank f55565fcafec048_23	fill in the blank f55565fcafec048_24
		fill in the blank f55565fcafec048_26	fill in the blank f55565fcafec048_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 11cfcdf4502aff1_1

c. Why was the company able to issue the bonds for only $9,596,904 rather than for the face amount of $10,400,000? The market rate of interest is the contract rate of interest.