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On the first day of its fiscal year, Chin Company issued $28,800,000 of five-year, 10% bonds to finance its operations of producing and selling home

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On the first day of its fiscal year, Chin Company issued $28,800,000 of five-year, 10% 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 11%, resulting in Chin Company receiving cash of $27,714,571. 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 dollor.) 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 dollat) For a compound transaction, if an amount box does not require an entry, leave it blank. Round your answers to the nearest dollar. Bonds Payoble is aiways recorded at tace value. Any difference in issue pelce is reflected in a premium or discount account. The straight-line method of amportaration provides equal amounts of amortization cver the life of the bond. *Ond Uy War Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account. The straight-fine method of amortization provides equal amounts of amortization over the life of the bond. b. Determine the amount of the bond interest expense for the first year. c. Why was the company able to issue the bonds for only $27,714,571 rather than for the face amount of $28,800,000 ? The market rate of interest is the contract rate of interest. Bonds Payable is always recorded at foce value. Any difference in issue price is refected in a premium or discount account; The straight-line method of amortization provides equal amounts of amortization over the life of the bond

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