On July 1, Year 1, Danzer Industries Inc. issued $6,300,000 of 6-year, 8% bonds at a market (effective) interest rate of 10%, receiving cash of $5,741,631. 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. If an amount box does not require an entry, leave it blank.

		fill in the blank 82bde6f30007ff6_2	fill in the blank 82bde6f30007ff6_3
		fill in the blank 82bde6f30007ff6_5	fill in the blank 82bde6f30007ff6_6
		fill in the blank 82bde6f30007ff6_8	fill in the blank 82bde6f30007ff6_9

2. Journalize the entries to record the following: If an amount box does not require an entry, leave it blank.

a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. (Round your answer to the nearest dollar.)

		fill in the blank 18acf0fdefe4040_2	fill in the blank 18acf0fdefe4040_3
		fill in the blank 18acf0fdefe4040_5	fill in the blank 18acf0fdefe4040_6
		fill in the blank 18acf0fdefe4040_8	fill in the blank 18acf0fdefe4040_9

b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. (Round your answer to the nearest dollar.)

		fill in the blank ab0ebe02efebfb2_2	fill in the blank ab0ebe02efebfb2_3
		fill in the blank ab0ebe02efebfb2_5	fill in the blank ab0ebe02efebfb2_6
		fill in the blank ab0ebe02efebfb2_8	fill in the blank ab0ebe02efebfb2_9

3. Determine the total interest expense for Year 1. Round to the nearest dollar. $fill in the blank 8935a9fcbfc6036_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 $5,741,631 received for the bonds by using Exhibit 5 and Exhibit 7. (Round you PV values to 5 decimal places and the final answers to the nearest dollar.) Your total may vary slightly from the price given due to rounding differences.

Present value of the face amount	$fill in the blank 8935a9fcbfc6036_3
Present value of the semi-annual interest payments	$fill in the blank 8935a9fcbfc6036_4
Price received for the bonds	$fill in the blank 8935a9fcbfc6036_5