Instructions Chart of Accounts Journal Final Questions Instructions On January 1, the first day of its fiscal your Chin Company issued $18.400,000 of five year, 8% bonds to finance its operations of producing and selling home Improvement products interest is payablo somandaly The bonds were med at a market effective interest rate of ou, resulting in Chun Company receive cohol $17.672 074 Required: A Journaize the entries to record the following (refer to the Chart of Accounts for exact worching of account thes) 1 Issuance of the bonds 2 First semiannual interest payment The bond discount amortization, using the straight ne method is combined with the semana interest paym (Round your answer to the nearest dolar) 3 Secondseerianual interest payment. The band discount amortization using the straight-line method is combined with the seara interest payment (Round your answer to the nearest dollar) B Determine the amount of the bond interest expense for the first year C. Explain why the company was able to issue the bands for only $17.672 074 rather than for the face amount of $18.400,000 A Journalize the entries to record the transactions Refer to the Chart of Accounts for exact wording of account Alles PAGE 10 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF DEBIT CREDIT ASSETS IBILITIES 1 2 3 4 5 6 7 8 B. Determine the amount of the bond Mest price for the first you C Explain why the company was able to issue the bonds for only $17 872 074 rather than for the face amount of $18.400 000 The bonds soll for less than their face amount because the market rate of wrestis the contract rate of interest Investors willing to pay the full face amount for bonds that pay a lower contract rate of wterest that the rate they could earn on similar bonds (market rate) Instructions On January 1, the first day of its fiscal year, Chin Company issued $18.400,000 of five year, 8% bonds to finance its operations of producing and soling home improvement products Interest is payable semiannually. The bonds were issued at a market coffective interest rate of 9%, resulting in Chin Company receiving cash of $17.672074 Required: A Jourre teatres to record the following (refer to the Chart of Accounts for exact wording of account is) 1. Issuance of the bonds 2 First wanna interest paymit The bond discount amortization using the straight one method is combined with the semiannual interest payment (Round your answer to the newest collar) 3. Second soweiterest payment The bond discount amortization, using the straight line method is combined with the somian interest payment (Round your answer to the nearest dollar) B. Dotere the amount of the bord interest expense for the first year C Explain why the company was able to issue the bonds for only $17.672,074 rather than for the face amount of $18.400,000 A Journalue the entries to record the transactions Refer to the Chart of Accounts for exact wording of accounts JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION ROSTRE DEBIT CREAT ASSETS 1 2 3 4 5 4 7 B. Determine the amount of the band interest expense for the first year $ C Explain why the company was able to issue the bonds for only $17,672074 rather than for the face amount of $18.400.000, The bonds sell for less than the face amount because the market rate of interestis contract rate of interest. Investors to pay the full face amount for bonds that pay a lower contract rate of interest than the rate they could eam on similar bonds (market)
