Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method On the first day of its fiscal year, Chin Company issued $13,200,000 of five-year, 9% 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 11%, resulting in Chin Company receiving cash of $12,205,028. a. Journalize the entries to record the following: 1. Issuance of the bonds. 2. First semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) 3. Second semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) For a compound transaction, if an amount box does not require an entry, leave it blank. Round your answers to the nearest dollar. 1. Cash 12,205,028 994,972 Discount on Bonds Payable Bonds Payable 13,200,000 2. Interest Expense Discount on Bonds Payable Cash HIIT 3. Interest Expense Discount on Bonds Payable Cash b. Determine the amount of the bond interest expense for the first year. c. Why was the company able to issue the bonds for only $12,205,028 rather than for the face amount of $13,200,000? The market rate of interest is greater than the contract rate of interest. Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method On the first day of its fiscal year, Chin Company issued $15,600,000 of five-year, 11% 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 12%, resulting in Chin Company receiving cash of $15,025,841. a. Journalize the entries to record the following: 1. Issuance of the bonds. 2. First semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) 3. Second semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) For a compound transaction, if an amount box does not require an entry, leave it blank. Round your answers to the nearest dollar. 1. Cash 15,025,841 574,159 Discount on Bonds Payable Bonds Payable 15,600,000 2. Interest Expense Discount on Bonds Payable Cash 3. Interest Expense Discount on Bonds Payable Cash INDI b. Determine the amount of the bond interest expense for the first year. c. Why was the company able to issue the bonds for only $15,025,841 rather than for the face amount of $15,600,000? The market rate of interest is greater than the contract rate of interest. On the first day of its fiscal year, Chin Company issued $13,000,000 of five-year, 12% 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 13%, resulting in Chin Company receiving cash of $12,532,777. a. Journalize the entries to record the following: 1. Issuance of the bonds. 2. First semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar) 3. Second semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) For a compound transaction, if an amount box does not require an entry, leave it blank. Round your answers to the nearest dollar. Cash 1. 12,532,777 Discount on Bonds Payable 467,223 Bonds Payable 13,000,000 Interest Expense 2. 1,247,223 Discount on Bonds Payable 467,223 Cash 780,000 Interest Expense 3. 1,247,223 Discount on Bonds Payable 467,223 X Cash 780,000 Feedback Check My Work b. Determine the amount of the bond interest expense for the first year. c. Why was the company able to issue the bonds for only $12,532,777 rather than for the face amount of $13,000,000? The market rate of interest is greater than the contract rate of interest