Print item Entries for Issuing Bonds and Amortizing Discount by Straight-Line Me

Question

Print item Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method ,600,000 of five-year, 10% bonds to finance its operations of producing and selling home On the first day of its fiscal year, Chin Company issued $29, improvement products. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 12%, receiving cash of $27,421,277. resulting in Chin Company 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 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.) 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. 3. Previous Next

Explanation / Answer

a)Journal Entry 1) Cash $27,421,277 Discount on Bonds Payable $2,178,723                       Bonds Payable $29,600,000 2) Interest Expenses $1,588,936                 Discount on Bonds Payable = $2,178,723/20 $108,936                 Cash ($29,600,000 x 10% x 6/12) $1,480,000 3) Interest Expenses $1,588,936                 Discount on Bonds Payable = $2,178,723/20 $108,936                 Cash ($29,600,000 x 10% x 6/12) $1,480,000 b) Bond Interest Expenses = $1588936 +1588936 $3,177,872 c) Higher than The bonds are issued at discount when market interest rate is more than the contract interest rate.

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