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EX 14-6 Entries for issuing bonds and amortizing discount by straight-line method OBJ. 2, 3 On the first day of its fiscal year, Chin Company issued $10,000,000 of five-year, 7% 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 8%, resulting in Chin Company receiving cash of $9,594,415. 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. Round your answer to the nearest dollar. 3. Second semiannual interest payment. The bond discount amortization is combined with the semiannual interest payment. Round your answer to the nearest dollar. b. Determine the amount of the bond interest expense for the first year. c. Explain why the company was able to issue the bonds for only $9,594,415 rather than for the face amount of $10,000,000.

EX 14-6 Entries for issuing bonds and amortizing discount by straight-line method OBJ. 2, 3 On the first day of its fiscal year, Chin Company issued $10,000,000 of five-year, 7% 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 8%, resulting in Chin Company receiving cash of $9,594,415. 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. Round your answer to the nearest dollar. 3. Second semiannual interest payment. The bond discount amortization is combined with the semiannual interest payment. Round your answer to the nearest dollar. b. Determine the amount of the bond interest expense for the first year. c. Explain why the company was able to issue the bonds for only $9,594,415 rather than for the face amount of $10,000,000.

FINANCIAL ACCOUNTING
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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Please provide the breakdown/answers for 14-6 & 14-7, attached
EX 14-6 Entries for issuing bonds and amortizing discount by straight-line method OBJ. 2, 3 On the first day of its fiscal year, Chin Company issued $10,000,000 of five-year, 7% 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 8%, resulting in Chin Company receiving cash of $9,594,415. 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. Round your answer to the nearest dollar. 3. Second semiannual interest payment. The bond discount amortization is combined with the semiannual interest payment. Round your answer to the nearest dollar. b. Determine the amount of the bond interest expense for the first year. c. Explain why the company was able to issue the bonds for only $9,594,415 rather than for the face amount of $10,000,000.
Transcribed Image Text:EX 14-6 Entries for issuing bonds and amortizing discount by straight-line method OBJ. 2, 3 On the first day of its fiscal year, Chin Company issued $10,000,000 of five-year, 7% 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 8%, resulting in Chin Company receiving cash of $9,594,415. 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. Round your answer to the nearest dollar. 3. Second semiannual interest payment. The bond discount amortization is combined with the semiannual interest payment. Round your answer to the nearest dollar. b. Determine the amount of the bond interest expense for the first year. c. Explain why the company was able to issue the bonds for only $9,594,415 rather than for the face amount of $10,000,000.
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