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- 5 x Redemption of bonds Payable A Congaze Now? | Online trachin x Search Truthcok Solutions | Chr* C Family Style TOGO - The Chateau x + → C v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=assignmentsitakeAssignmentSessionLocator=assignment-takeinpro... € ☆ Paused Jetblue email Ch 14-3 Exercises and Problems eBook Show Me How Calculator Print Item 1. EX.14-05.BLANKSHEET.AL... Entries for Issuing Bands and Amortizing Discount by Straight-Line Mathod 2. EX. 14-06.ALGO On the first day of its fiscal year, Chin Company issued $24,900,000 af five-year, 9% bands to finance its operations of producing and selling home improvement products. Interest is payable serniannually. The bonds were issued at a market (effective) interest rate of 10%, resulting in Chin Company receiving cast of $23,938,557. 3. EX. 14-07.ALGO 4. EX. 14-08.BLANKSHEETAL... • 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) 5. EX.14-09.ALGO 6. EX.14-12.ALGO For a compound transaction, if an amount box does not require an entry, leave it blank. Round your answers to the nearest dollar. 7. EX. 14-14.ALGO 1. - IL b. Determine the amount of the band interest expense for the first year c. Why was the company able to issue the bonds for only $23,938,557 rather than for the face amount of $24.900,000? The market rate of interest is the contract rate of interest. Check My Work 2 more Check My Work uses remaining. Previous Progress: 2/7 items Next > Assignment Score: 40.63% All work saved. Email Instructor Save and Exit Submit Assignment for Grading Type here to search O e 69 A ( 4 12:37 PM 11/14/20193

Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method

On the first day of its fiscal year, Chin Company issued $24,900,000 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 10%, resulting in Chin Company receiving cash of $23,938,557.

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.

1.
2.
3.

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 $23,938,557 rather than for the face amount of $24,900,000?
The market rate of interest is   the contract rate of interest.

Answer 1

A)	Journal Entries
	Date	Account titles & Explanations					Debit	Credit
	1-Jan	Cash					23,938,557
		Discount on bonds payable					961,443
		Bonds payable						24,900,000
	30-Jun	interest expense					1216644
		discount on bonds payable			(961443/10)			96144
		Cash	(24,900,000*9%*1/2)					1120500
	31-Dec	interest expense					1216644
		discount on bonds payable						96144
		Cash						1120500
b)		Amount of interest expense for the year				2433289
c)		the market rate of interest is higher than the contract rate of 9%