On July 1, Year 1, Danzer Industries Inc. issued $37,400,000 of 10-year, 8% bonds at a market (effective) interest rate of 10%, receiving cash of $32,739,152. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Required:
| 1. | Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1.* |
| 2. | Journalize the entries to record the following:* | a. | The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.) | | b. | The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.) | |
| 3. | Determine the total interest expense for Year 1. |
| 4. | Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? |
| 5. | Compute the price of $32,739,152 received for the bonds by using the present value tables. (Round to the nearest dollar.) | | *Refer to the Chart of Accounts for exact wording of account titles.   
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Bond discount, entries for bonds payable transactions Instructions Present Value Tables Chart of Accounts Journal Final Questions Instructions on July 1. Year 1. Danzer Industries Inc. issued $37.400,000 ot 10-year, 8% bonds at a market (ettective) interest rate of 10%, receiving cash of $32,739,152. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 2. Journalize the entries to record the following a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. (Rournd to the nearest doflar) b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.) 3. Determine the total interest expense for Year 1 . 4. Wil the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? 5. Compute the price of S32,739,152 received for the bonds by using the present value tables. (Round to the nearest dollar.) Refer to the Chart of Accounts for exact wording of account titles Journal 1. Journalize the entry to record the amount or cash proceeds from the issuance or the bonds on July 1, Year 1 . 2a. Jounalize the entry to record the first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. (Round to the nearest doflar.) Refer to the Chart of Accounts for exact wording of account titles PAGE 10 JOURNAL ACCOUNTING EQUATION DATE DESCRIPTION POST. REF DEBIT CREDIT ASSETS LIABILITIES EQUITY 3. Determine the total interest expense for Year 1. S 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? O Yes O No . Compute the price of $32,739,152 received for the bonds by using the tables shown in Present Value Tables. (Round to the nearest dollar.) Present value of the face amount Present value of the semiannual interest payments Price received for the bonds
