Instructions On January 1, the first day of its fiscal year, Ebert Company issued $12.500,000 of 10-year, 9% bonds to finance its operations, Interest is payable semiannually. The bonds were issued at a market (ellective) interest rate of 11%, resulting in Ebert Company receiving cash of $11,006,214. The company uses the interest method. Required: A. Journalize the entries to record the following transactions. Refer to the Chart of Accounts for exact wording of account titles. 1. Sale of the bonds 2. First semiannual interest payment, including amortization of discount. Round to the nearest dollar. 3. Second semiannual interest payment, including amortization of discount. Round to the nearest dollar. B. Compute the amount of the bond interest expense for the first year. C. Explain why the company was able to issue the bonds for only $11,006,214 rather than for the face amount of $12,500,000 CHART OF ACCOUNTS Ebert Company General Ledger ASSETS REVENUE 110 Cash 410 Sales 111 Petty Cash 610 Interest Revenue 121 Accounts Receivable 611 Gain on Redemption of Bonds 122 Allowance for Doubtful Accounts 126 Interest Receivable EXPENSES 127 Notes Receivable 510 Cost of Merchandise Sold 515 Credit Card Expense 516 Cash Short and Over 131 Merchandise Inventory 141 Office Supplies 142 Store Supplies 151 Prepaid Insurance 191 Land 521 Sales Salaries Expense 522 Office Salaries Expense 531 Advertising Expense 532 Delivery Expense 533 Repairs Expense 534 Selling Expenses 535 Rent Expense 192 Store Equipment 193 Accumulated Depreciation-Store Equipment 194 Office Equipment 195 Accumulated Depreciation Office Equipment 536 Insurance Expense TOWEquipem 193 Accumulated Depreciation-Store Equipment 194 Office Equipment 195 Accumulated Depreciation Office Equipment LIABILITIES 210 Accounts Payable 221 Salaries Payable 231 Sales Tax Payable 232 Interest Payable 241 Notes Payable 251 Bonds Payable 252 Discount on Bonds Payable 253 Premium on Bonds Payable 533 Repairs Expense 534 Selling Expenses 535 Rent Expense 536 Insurance Expense 537 Office Supplies Expense 538 Store Supplies Expense 541 Bad Debt Expense 561 Depreciation Expense-Store Equipment 562 Depreciation Expense-Office Equipment 590 Miscellaneous Expense 710 Interest Expense 711 Loss on Redemption of Bonds EQUITY 311 Common Stock 312 Paid-In Capital in Excess of Par-Common Stock 315 Treasury Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 351 Cash Dividends 352 Stock Dividends 390 Income Summary Check My Wiose eBook Calculator Print Item Journal A. Journalize the entries to record the transactions. Refer to the Chart of Accounts for exact wording of account titles. PAGE 10 JOURNAL DATE DESCRIPTION POST. REF DEBIT CREDIT 1 2 3 5 6 7 8 Additional Question Additional Question B. Compute the amount of the bond interest expense for the first year. Annual interest paid S Discount amortized Interest expense for first year Final Question C. Explain why the company was able to issue the bonds for only $11,000,214 rather than for the face amount of $12.500,000 iling to pay the face The bonds sell for less than their face amount because the market rate of interest is the contract rate of interest investors amount for bonds that pay a lower contract rate of interest than the rate they could eam on similar bonds (market rate). Previous Check My Work 10 more Check My Work uses remaining Submit Assignment for Gradie All work saved