Entries for issuing bonds and amortizing discount by straight-line method On the first day of its fiscal year, Chin Company issued $11,600,000 of 5-year, 9% bonds to finance its operations of producing and selling home improvement products. Inte is payable semiannually. The bonds were issued at a market (effective) interest rate of 11%, resulting in Chin receiving cash of $10,725,631. 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 band 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 13
Entries for issuing bonds and amortizing discount by straight-line method On the first day of its fiscal year, Chin Company issued $11,600,000 of 5-year, 9% bonds to finance its operations of producing and selling home improvement products. Inte is payable semiannually. The bonds were issued at a market (effective) interest rate of 11%, resulting in Chin receiving cash of $10,725,631. 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 band 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 13
Financial Accounting
14th Edition
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Carl Warren, Jim Reeve, Jonathan Duchac
Chapter14: Long-term Liabilities: Bonds And Notes
Section: Chapter Questions
Problem 6PA: Saverin, Inc. produces and sells outdoor equipment. On July 1, 2016, Saverin, Inc. issued 62,500,000...
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Question
![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 $10,725,631 rather than for the face amount of $11,600,0007
The market rate of interest is
the contract rate of interest. Therefore, inventors
willing to pay the full face amount of the bonds](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc262d289-2c02-42d8-a51f-df3a8d8e53ed%2F49fe5c59-4ece-40e4-8b7d-c5fa6b1e5ede%2Fz1ocxer_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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 $10,725,631 rather than for the face amount of $11,600,0007
The market rate of interest is
the contract rate of interest. Therefore, inventors
willing to pay the full face amount of the bonds
![Entries for issuing bonds and amortizing discount by straight-line method
On the first day of its fiscal year, Chin Company issued $11,600,000 of 5-year, 9% 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 11%, resulting in Chin receiving cash of $10,725,631.
a. Journalize the entries to record the following:
1. Issuance of the bonds.
2. First semiannual interest payment. The band discount is combined with the semiannual interest payment. (Round your answer to the nearest dollar.)
3. Second semiannual interest payment. The band 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.
3.
M](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc262d289-2c02-42d8-a51f-df3a8d8e53ed%2F49fe5c59-4ece-40e4-8b7d-c5fa6b1e5ede%2Fo1dx0l8_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Entries for issuing bonds and amortizing discount by straight-line method
On the first day of its fiscal year, Chin Company issued $11,600,000 of 5-year, 9% 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 11%, resulting in Chin receiving cash of $10,725,631.
a. Journalize the entries to record the following:
1. Issuance of the bonds.
2. First semiannual interest payment. The band discount is combined with the semiannual interest payment. (Round your answer to the nearest dollar.)
3. Second semiannual interest payment. The band 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.
3.
M
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