Entries for issuing bonds and amortizing discount by straight-line methodOn the first day of its fiscal year, Chin Company issued $16,900,000 of 5-year, 10% 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 12%, resulting in Chin receiving cash of $15,656,067.I'm confussed on how to calculate semiannual amortization. Entries for issuing bonds and amortizing discount by straight-line methodOn the first day of its fiscal year, Chin Company issued $16,900,000 of 5-year, 10% bonds to finance its operations of producing andselling home improvement products. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 12%,resulting in Chin receiving cash of $15,656,067.a. Journalize the entries to record the following:1. Issuance of the bonds.2. First semiannual interest payment. The bond discount is combined with the semiannual interest payment. (Round your answer tothe nearest dollar.)3. Second semiannual interest payment. The bond discount is combined with the semiannual interest payment. (Round your answer tothe nearest dollar.)If an amount box does not require an entry, leave it blank.Entries1.2.3.CashAccountDiscount on Bonds PayableBonds PayableDiscount on Bonds PayableCashDebit15,656,0671,243,9331,466,966 XCredit16,900,000829,289 X845,000 1.2.3.CashDiscount on Bonds PayableBonds PayableDiscount on Bonds PayableCashFeedbackCheck My Work15,656,0671,243,9331,466,966 X16,900,000829,289 X845,000b. Determine the amount of the bond interest expense for the first year.$c. Why was the company able to issue the bonds for only $15,656,067 rather than for the face amount of $16,900,000?The market rate of interest isthe contract rate of interest. Therefore, inventorspay the full face amount of the bonds.willing to

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FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

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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 $16,900,000 of 5-year, 10% 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 12%, resulting in Chin receiving cash of $15,656,067.

I'm confussed on how to calculate semiannual amortization.

Entries for issuing bonds and amortizing discount by straight-line method
On the first day of its fiscal year, Chin Company issued $16,900,000 of 5-year, 10% 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 12%,
resulting in Chin receiving cash of $15,656,067.
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.
Entries
1.
2.
3.
Cash
Account
Discount on Bonds Payable
Bonds Payable
Discount on Bonds Payable
Cash
Debit
15,656,067
1,243,933
1,466,966 X
Credit
16,900,000
829,289 X
845,000

1.
2.
3.
Cash
Discount on Bonds Payable
Bonds Payable
Discount on Bonds Payable
Cash
Feedback
Check My Work
15,656,067
1,243,933
1,466,966 X
16,900,000
829,289 X
845,000
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 $15,656,067 rather than for the face amount of $16,900,000?
The market rate of interest is
the contract rate of interest. Therefore, inventors
pay the full face amount of the bonds.
willing to

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A journal entry is a form of accounting entry that is used to report a business transaction in a company's accounting records.

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