On January 1, the first day of its fiscal year, Jacinto Company bsued $21,300,000 of five-year, 4% bonds fo finance its eperations of producine and selling home ingrevement products. Interest is payable semiannuaily The bonds were issued at a market (effective) interest rate of s\%, resulling in dacinto Compary receting canh of \$20,367, 936 . Requiredt a. Joumatice the enthess to cecord the following frefer to the chart of accounts for the exact wording of the account teles. CNCW joumais de not use ines for joumal explanstions. Every ine on a journat page is used for dobit or credit entries. CNOWjournats will automatically indert a credit enty when a credit amount is entered.) 1. Issuance of the bonds. 2. Firs semiarinus interest payment The bond discoumt amortzation, using the atruight- wine method, is combined with ine semiannual intereat paymert (Round your answer to the newest dollar.). 3. Second seminnnual interest poyment. The bond discount amortizalion, using the straight hine method, is combined weh the semiannus interest payment. (Round your answer to the nearest dollak). a. Journakice the entres to record the following frefer to the chart of accounts for the exact wording of the account biles CNowjocrnats do not use lines for joumal explanations. Every line on a journal page is used for dabit or credt entnes CNow joumals will autornatically indent a ceedit entry when a credit amount is entered): 1. Esiuance of the bonds Dayment. (Round your answer fo the nearest dollar.) 3. Second semionnual interest payment. The bond doscount importzation using the straight-line method, as comained with the semianinut interest payment (Pound your answer to the newrest doliak) b. Deferthine the amount of the bond anerest expense for the fort year c. Explain why the company was able to issue the bonds for omy 520,567,934 rather tharl for the face amount of $21,300,000 Instruetions Ghart of Aecounts Jotinal Final Questions Instructions Chat of Accounts CHART OF ACCOUNTS Jacinto Company General Ledger ASSETS 110 Cash 111 Petty Cash 121 Accounts Recelvable 122. Alowance for Doutitual Accounts 126 Intorest Receivable 127 Notes Receivable REVENUE 410 Sales 610 Interest Revenue 611. Gain on Redemption of Bonds EXPENSES 510 Cost of Merchandise Sold Instrutions chair of Acecmis Journa Final Questions Instructions Ghaft of Accounts 131 Merchandise Inventory 141 Office Sunplies 142 Store Supplies 151 Prepaid lnsurance 191 Land 192 Store Equipment 193 Accumulated Deprectation-Store Equpment 194 Ofice Equipment 195 Accumulated Depreciation-Otfice Equiprnent L.ABILITIES 210 secniaste favahle 515 Credit Card Expense 516 Cash Short and Over 521 Sales Salaries Expense 522 Olice Salaries Expense 531 Advertising Expense 532 Deitvery Expense 533 Repairs Expense 534 Selling Expenses 535. Rent Expense 535 Insurance Expense 537 Orice Supplias Expense 5ar Stam Simolied Fvense instrations Chat of Acoomits dournal Final Guestions Instructions Ghart of Accounts 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 EQUITY 311 Common Stock 312. Paid-in Capital in Excess of Par-Common Stock 538 Store Supplies Expense 541 Bad Debt Expense 561 Depreciation Expense-Store Equipment 562 Depreciation Expense-Ollice Equipment 590 Miscellaneous Expense 710 tnterest Expense 711 Loss on Redemption of Bonds Instructions Chart of Accounts Journal Final Questions Instructions Chart of Accounts 241 Notes Payable 251 Bonds Payable 252. Discount on Bonds Payable 253 Premium on Bonds Payable 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 Eamings 351 Cash Dividends 352 Stock Dividends 590 Miscellaneous Expense 710 interest Expense 711 Loss on Redemption of Bonds a. Joumalze the entries to recond the transactions. Fefer fo the chart of accounts for the exact wording of the account tebes. CNOW joumals do not use ines for joumal explanations Every line on a joumal page is used for debit or credi entries. CNOW joumals will automaticaly indent a credt entry when a credit annount is entered Aound your answer to bhe nearest dollar: b. Defermine the amount of the bond interet expense for the first year c. Explain why the campany was able to issue the bonds for only 520,367,930 tather than for the face amount of $21,300,000 The bonds sell for less than thei face ameunt because the market rate of interest is the contract rate of interest. Imestors wiling to pay the ful face amount for bonds that pay a fover contract rate of interest than the rate they ce S"onds (market rate)