Daan Corporation wholesales repair products to equipment manufacturers. On April 1, 2016, Daan Corporation issued $3,400,000 of 4-year, 12% bonds at a market (effective) interest rate of 11%, receiving cash of $3,507,686. Interest is payable semiannually on April 1 and October 1. a. Journalize the entry to record the issuance of bonds on April 1, 2016. For a compound transaction, if an amount box does not require an entry, leave it blank. fill in the blank 96de01ff9f9efb1_2 fill in the blank 96de01ff9f9efb1_3 fill in the blank 96de01ff9f9efb1_5 fill in the blank 96de01ff9f9efb1_6 fill in the blank 96de01ff9f9efb1_8 fill in the blank 96de01ff9f9efb1_9 b. Journalize the entry to record the first interest payment on October 1, 2016, and amortization of bond premium for six months, using the straight-line method. The bond premium amortization is combined with the semiannual interest payment. (Round to the nearest dollar.) For a compound transaction, if an amount box does not require an entry, leave it blank. fill in the blank 5d100cff0058ff7_2 fill in the blank 5d100cff0058ff7_3 fill in the blank 5d100cff0058ff7_5 fill in the blank 5d100cff0058ff7_6 fill in the blank 5d100cff0058ff7_8 fill in the blank 5d100cff0058ff7_9 c. Why was the company able to issue the bonds for $3,507,686 rather than for the face amount of $3,400,000? The market rate of interest is the contract rate of interest.
Daan Corporation wholesales repair products to equipment manufacturers. On April 1, 2016, Daan Corporation issued $3,400,000 of 4-year, 12% bonds at a market (effective) interest rate of 11%, receiving cash of $3,507,686. Interest is payable semiannually on April 1 and October 1.
a.
fill in the blank 96de01ff9f9efb1_2 | fill in the blank 96de01ff9f9efb1_3 | ||
fill in the blank 96de01ff9f9efb1_5 | fill in the blank 96de01ff9f9efb1_6 | ||
fill in the blank 96de01ff9f9efb1_8 | fill in the blank 96de01ff9f9efb1_9 |
b. Journalize the entry to record the first interest payment on October 1, 2016, and amortization of bond premium for six months, using the straight-line method. The bond premium amortization is combined with the semiannual interest payment. (Round to the nearest dollar.) For a compound transaction, if an amount box does not require an entry, leave it blank.
fill in the blank 5d100cff0058ff7_2 | fill in the blank 5d100cff0058ff7_3 | ||
fill in the blank 5d100cff0058ff7_5 | fill in the blank 5d100cff0058ff7_6 | ||
fill in the blank 5d100cff0058ff7_8 | fill in the blank 5d100cff0058ff7_9 |
c. Why was the company able to issue the bonds for $3,507,686 rather than for the face amount of $3,400,000?
The market rate of interest is the contract rate of interest.
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