On the first day of its fiscal year, Chin Company issued $26,700,000 of five-year, 7% 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 8%, resulting in Chin Company receiving cash of $25,617,088.

a. Journalize the entries to record the following:

1. Issuance of the bonds.
2. First semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar.)
3. Second semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar.)

For a compound transaction, if an amount box does not require an entry, leave it blank. Round your answers to the nearest dollar.

Cash
	Discount on Bonds Payable
	Bonds Payable
2.	Interest Expense
	Discount on Bonds Payable
	Interest Payable
3.	Interest Expense
	Discount on Bonds Payable
	Interest Payable

b. Determine the amount of the bond interest expense for the fi

c. Why was the company able to issue the bonds for only $25,617,088 rather than for the face amount of $26,700,000?b. Determine the amount of the bond interest expense for the first year. $

The market rate of interest is the contract rate of interest.