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1. Issuance of the bonds. 2. First semiannual interest payment. The be 3. Second semiannual interest payment. The If an amount box does not require an entry. 1. 2. 000 000

1. Issuance of the bonds. 2. First semiannual interest payment. The be 3. Second semiannual interest payment. The If an amount box does not require an entry. 1. 2. 000 000

Financial Accounting
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter14: Long-term Liabilities: Bonds And Notes
Section: Chapter Questions
Problem 6PA: Saverin, Inc. produces and sells outdoor equipment. On July 1, 2016, Saverin, Inc. issued 62,500,000...
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On the first day of its fiscal year, Chin Company issued $24,900,000 of five-year, 6% 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 receiving cash of $22,880,286. a. Journalize the entries to record the following: 1. Issuance of the bonds. 2. First semiannual interest payment. The bond discount is combined with the semiannual interest payment. (Round your answer to the nearest dollar) 3. Second semiannual interest payment. The bond discount is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) If an amount box does not require an entry, leave it blank. 1. b. Determine the amount of the band interest expense for the first year. c. Why was the company able to issue the bonds for only $22,880,286 rather than for the face amount of $24,900,000? The market rate of interest is the contract rate of interest. Therefore, inventors; bonds. Check My Work willing to pay the full face amount of the Previous Next
Transcribed Image Text:On the first day of its fiscal year, Chin Company issued $24,900,000 of five-year, 6% 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 receiving cash of $22,880,286. a. Journalize the entries to record the following: 1. Issuance of the bonds. 2. First semiannual interest payment. The bond discount is combined with the semiannual interest payment. (Round your answer to the nearest dollar) 3. Second semiannual interest payment. The bond discount is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) If an amount box does not require an entry, leave it blank. 1. b. Determine the amount of the band interest expense for the first year. c. Why was the company able to issue the bonds for only $22,880,286 rather than for the face amount of $24,900,000? The market rate of interest is the contract rate of interest. Therefore, inventors; bonds. Check My Work willing to pay the full face amount of the Previous Next
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