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 isthe contract rate of interest. Therefore, inventors;bonds.Check My Workwilling to pay the full face amount of thePreviousNext

Bonds are frequently utilized by governments and enterprises to finance a wide range of projects,…

Answered: 1. Issuance of the bonds. 2. First…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Lincraft Corp. reports a current ratio of 3-to-1 in its 20X2 financial statements. The statement of financial position shows current assets of $3,140,500 and current liabilities of $1,064,100. Lincraft has accounts receivable of $1,299,300. The company transfers $1,002,000 of these accounts receivable to a financial institution. There are $35,200 of bad debts associated with these accounts receivable, an amount that is already in the allowance for doubtful accounts. Proceeds of $898,250 are received from the transfer. The transfer is on a non-notification basis, which means that the customers pay Lincraft and Lincraft then remit the cash to the financial institution. The customers pay $946,000 to Lincraft on schedule, $35,200 is written off to the allowance at the appropriate time, and the cash remittance is forwarded to the financial institution. Required: 1. Record all journal entries for the sequence of events assuming: a. The transfer is recorded as a sale/derecognition. (If no…
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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 $26,500,000 of five-year, 12% 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 13%, resulting in Chin receiving cash of $25,547,585. 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. 2. 3. 300 000 000 000 000 b. Determine the amount of the bond interest expense for the first year.

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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