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

   On the first day of its fiscal year, Chin Company issued $21,400,000 of five-year, 7% 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 8%, resulting in Chin receiving cash of $20,532,048.

   a. Journalize the entries to record the following:

   1. Issuance of the bonds.
   2. First semiannual interest payment. The bond discount is combined with the semiannual interest payment. (Round your answer to the nearest dollar.)
   3. Second semiannual interest payment. The bond discount is combined with the semiannual interest payment. (Round your answer to the nearest dollar.)

   If an amount box does not require an entry, leave it blank.

   1.		fill in the blank eacbcc077fd3046_2	fill in the blank eacbcc077fd3046_3
   		fill in the blank eacbcc077fd3046_5	fill in the blank eacbcc077fd3046_6
   		fill in the blank eacbcc077fd3046_8	fill in the blank eacbcc077fd3046_9
   2.		fill in the blank eacbcc077fd3046_11	fill in the blank eacbcc077fd3046_12
   		fill in the blank eacbcc077fd3046_14	fill in the blank eacbcc077fd3046_15
   		fill in the blank eacbcc077fd3046_17	fill in the blank eacbcc077fd3046_18
   3.		fill in the blank eacbcc077fd3046_20	fill in the blank eacbcc077fd3046_21
   		fill in the blank eacbcc077fd3046_23	fill in the blank eacbcc077fd3046_24
   		fill in the blank eacbcc077fd3046_26	fill in the blank eacbcc077fd3046_27

   b. Determine the amount of the bond interest expense for the first year. $fill in the blank 1e298b02bf8e019_1

   c. Why was the company able to issue the bonds for only $20,532,048 rather than for the face amount of $21,400,000? The market rate of interest is the contract rate of interest. Therefore, inventors willing to pay the full face amount of the bonds.