Entries for Issuing Bonds and Amortizing Discount by Straight Line Method On the first day of its fiscal year, Chin Company issued $12,000,000 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 $11,558,339 a Journalize the entries to record the following Issuance of the bonds 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 ) 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 fill in the blank cbb184fbdfc4047 2 fill in the blank cbb184fbdfc4047 3 Discount on Bonds Payable fill in the blank cbb184fbdfc4047 5 fill in the blank cbb184fbdfc4047 6 Bonds Payable fill in the blank cbb184fbdfc4047 8 fill in the blank cbb184fbdfc4047 9 2 Interest Expense fill in the blank cbb184fbdfc4047 11 fill in the blank cbb184fbdfc4047 12 Discount on Bonds Payable fill in the blank cbb184fbdfc4047 14 fill in the blank cbb184fbdfc4047 15 Cash fill in the blank cbb184fbdfc4047 17 fill in the blank cbb184fbdfc4047 18 3 Interest Expense fill in the blank cbb184fbdfc4047 20 fill in the blank cbb184fbdfc4047 21 Discount on Bonds Payable fill in the blank cbb184fbdfc4047 23 fill in the blank cbb184fbdfc4047 24 Cash fill in the blank cbb184fbdfc4047 26 fill in the blank cbb184fbdfc4047 27 b Determine the amount of the bond interest expense for the first year $fill in the blank 76280d074075f97 1 c Why was the company able to issue the bonds for only $11,558,339 rather than for the face amount of $12,000,000 The market rate of interest is greater than the contract rate of interest

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 09, 2024

Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method On the first day of its fiscal year, Chin Company issued $12,000,000 of five-year, 11%

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

On the first day of its fiscal year, Chin Company issued $12,000,000 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 $11,558,339.

a. Journalize the entries to record the following:

Issuance of the bonds.
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.)
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	fill in the blank cbb184fbdfc4047_2	fill in the blank cbb184fbdfc4047_3
	Discount on Bonds Payable	fill in the blank cbb184fbdfc4047_5	fill in the blank cbb184fbdfc4047_6
	Bonds Payable	fill in the blank cbb184fbdfc4047_8	fill in the blank cbb184fbdfc4047_9
2.	Interest Expense	fill in the blank cbb184fbdfc4047_11	fill in the blank cbb184fbdfc4047_12
	Discount on Bonds Payable	fill in the blank cbb184fbdfc4047_14	fill in the blank cbb184fbdfc4047_15
	Cash	fill in the blank cbb184fbdfc4047_17	fill in the blank cbb184fbdfc4047_18
3.	Interest Expense	fill in the blank cbb184fbdfc4047_20	fill in the blank cbb184fbdfc4047_21
	Discount on Bonds Payable	fill in the blank cbb184fbdfc4047_23	fill in the blank cbb184fbdfc4047_24
	Cash	fill in the blank cbb184fbdfc4047_26	fill in the blank cbb184fbdfc4047_27

b. Determine the amount of the bond interest expense for the first year. $fill in the blank 76280d074075f97_1

c. Why was the company able to issue the bonds for only $11,558,339 rather than for the face amount of $12,000,000? The market rate of interest is greater than the contract rate of interest.