On the first day of its fiscal year, Jacinto Company issued $14,700,000 of five-year, 8% bonds to finance its operations of producing and sellinghome improvement products. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 9%, resulting inJacinto Company receiving cash of $14,118,450.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.3. Second semiannual interest payment. The bond discount amortization is combined with the semiannual interest payment.If an amount box does not require an entry, leave it blank. Round your answers to the nearest dollar.Cash1.14,118,450Discount on Bonds Payable581,550Bonds Payable14,700,0002.Interest Expense529,845Discount on Bonds Payable v581,155Cash V588,000Interest Expense3.529,845Discount on Bonds Payable58,155Cash588,000 b. Determine the amount of the bond interest expense for the first year. Round your answer to the nearest dollar.c. Why was the company able to issue the bonds for only $14,118,450 rather than for the face amount of $14,700,000?The market rate of interest is greater than vthe contract rate of interest.

Bond A bond is a type of loan provided by the investor to the company or Government. Investors are…

b. Determine the amount of the bond interest expense for the first year. Round your answer to the nearest dollar. c. Why was the company able to issue the bonds for only $14,118,450 rather than for the face amount of $14,700,000? The market rate of interest is greater than the contract rate of interest.

b. Determine the amount of the bond interest expense for the first year. Round your answer to the nearest dollar. c. Why was the company able to issue the bonds for only $14,118,450 rather than for the face amount of $14,700,000? The market rate of interest is greater than the contract rate of interest.

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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