Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method On the first day of its fiscal year, Chin Company issued $29,200,000 of five-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 Company receiving cash of $26,999,002. a. Journalize the entries to record the following: 1. Issuance of the bonds. 2. First semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) 3. Second semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) For a compound transaction, if an amount box does not require an entry, leave it blank. Round your answers to the nearest dollar. ✓ Discount on Bonds Payable Bonds Payable 1. Cash 2. Interest Expense Discount on Bonds Payable Cash ✓ 3. Interest Expense Discount on Bonds Payable Cash ✓ ✓ ✓ ✓ 26,999,002 2,200,998 ✔ 000 000 29,200,000 ✓ 1,314,000 ✓ 1,314,000 ✓
Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method On the first day of its fiscal year, Chin Company issued $29,200,000 of five-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 Company receiving cash of $26,999,002. a. Journalize the entries to record the following: 1. Issuance of the bonds. 2. First semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) 3. Second semiannual interest payment. The bond discount amortization, using the straight-line method, is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) For a compound transaction, if an amount box does not require an entry, leave it blank. Round your answers to the nearest dollar. ✓ Discount on Bonds Payable Bonds Payable 1. Cash 2. Interest Expense Discount on Bonds Payable Cash ✓ 3. Interest Expense Discount on Bonds Payable Cash ✓ ✓ ✓ ✓ 26,999,002 2,200,998 ✔ 000 000 29,200,000 ✓ 1,314,000 ✓ 1,314,000 ✓
Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
ChapterMB: Model-building Problems
Section: Chapter Questions
Problem 13M
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Step 1 Introduction
Bond :— It is one of the type of securities that pays fixed periodic interest and face value amount at the end of maturity term to their investors.
Journal Entry :— It is an act of recording transaction in books of account when transaction occurred.
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