Entries for issuing bonds and amortizing discount by straight-linemethodOn the first day of its fiscal year, Chin Company issued $10,000,000 offive-year, 7% bonds to finance its operations of producing and sellinghome improvement products. Interest is payable semiannually. Thebonds were issued at a market (effective) interest rate of 8%, resulting in Chin Company receiving cash of $9,594,415.a. Journalize the entries to record the following:1. Issuance of the bonds.2. First semiannual interest payment. The bond discount amortization is combined with the semiannual interestpayment. Round your answer to the nearest dollar.3. Second semiannual interest payment. The bond discountamortization is combined with the semiannual interestpayment. Round your answer to the nearest dollar. b. Determine the amount of the bond interest expense for the firstyear.c. Explain why the company was able to issue the bonds for only$9,594,415 rather than for the face amount of $10,000,000.
Entries for issuing bonds and amortizing discount by straight-line
method
On the first day of its fiscal year, Chin Company issued $10,000,000 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 $9,594,415.
a.
1. Issuance of the bonds.
2. First semiannual interest payment. The bond discount
amortization is combined with the semiannual interest
payment. Round your answer to the nearest dollar.
3. Second semiannual interest payment. The bond discount
amortization is combined with the semiannual interest
payment. Round your answer to the nearest dollar.
b. Determine the amount of the bond interest expense for the first
year.
c. Explain why the company was able to issue the bonds for only
$9,594,415 rather than for the face amount of $10,000,000.
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