Question
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%
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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:
- Issuance of the bonds.
- First semiannual interest payment. The bond discount is combined with the semiannual interest payment. (Round your answer to the nearest dollar.)
- 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.
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