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On the first day of its fiscal year, Chin Company issued $18,900,000 of five-year, 12 % bonds to finance its operations of producing and selling
On the first day of its fiscal year, Chin Company issued $18,900,000 of five-year, 12 % 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 Chin Company receiving cash of $18,220,730. a. Journalize the entries to record the following: 1. Issuance 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.) 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. 1 2. b. Determine the amount the bond interest expense for the first year. c. Why was the company able to issue the bonds for only $18.220,730 rather than for the face amount $18,900,000? The market rate of interest is the contract rate interest
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