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Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method On the first day of its fiscal year, Chin Company issued $23,300,000 of five-year, 8% 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 10%, resulting in Chin receiving cash of $21,500,755. 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.)

Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method On the first day of its fiscal year, Chin Company issued $23,300,000 of five-year, 8% 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 10%, resulting in Chin receiving cash of $21,500,755. 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.)

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 5PB: Dixon Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1,...
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Discount on Bonds Payable v Cash 932,000 V Interest Expense 3. Discount on Bonds Payable v Cash Feedback Check My Work 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 $21,500,755 rather than for the face amount of $23,300,000? The market rate of interest is greater than v the contract rate of interest. Therefore, inventors are not v willing to pay the full face amount of the bonds. Feedback Check My Work Feedback Check My Work
Transcribed Image Text:Discount on Bonds Payable v Cash 932,000 V Interest Expense 3. Discount on Bonds Payable v Cash Feedback Check My Work 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 $21,500,755 rather than for the face amount of $23,300,000? The market rate of interest is greater than v the contract rate of interest. Therefore, inventors are not v willing to pay the full face amount of the bonds. Feedback Check My Work Feedback Check My Work
Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method On the first day of its fiscal year, Chin Company issued $23,300,000 of five-year, 8% 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 10%, resulting in Chin receiving cash of $21,500,755. 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. Cash 1. 21,500,755 V Discount on Bonds Payable v 1,799,245 V Bonds Payable 23,300,000 Interest Expense 2. Discount on Bonds Payable Cash 932,000 Interest Expense 3. Discount on Bonds Payable v Cash v Feedback
Transcribed Image Text:Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method On the first day of its fiscal year, Chin Company issued $23,300,000 of five-year, 8% 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 10%, resulting in Chin receiving cash of $21,500,755. 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. Cash 1. 21,500,755 V Discount on Bonds Payable v 1,799,245 V Bonds Payable 23,300,000 Interest Expense 2. Discount on Bonds Payable Cash 932,000 Interest Expense 3. Discount on Bonds Payable v Cash v Feedback
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