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On January 1, the first day of its fiscal year, Dog Company issued $24,200,000 of five-year, 11% bonds to finance its operations of producing and
On January 1, the first day of its fiscal year, Dog Company issued $24,200,000 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 13%, resulting in Dog Company receiving cash of $22,460,399.
Required:
A. | Journalize the entries to record the following
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B. | Determine the amount of the bond interest expense for the first year. | ||||||
C. | Explain why the company was able to issue the bonds for only $22,460,399 rather than for the face amount of $24,200,000.
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