On the first day of its fiscal year, Chin Company issued $24,400,000 of five-yea
ID: 2437896 • Letter: O
Question
On the first day of its fiscal year, Chin Company issued $24,400,000 of five-year, 4% 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 6%, resulting in Chin receiving cash of $22,318,534.
a. Journalize the entries to record the following:
Issuance of the bonds.
b. Determine the amount of the bond interest expense for the first year.
$First semiannual interest payment. The bond discount is combined with the semiannual interest payment. (Round your answer to the nearest dollar.)
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. Round your answers to the nearest dollar.
1. Cash Discount on Bonds Payable Bonds Payable 2. Interest Expense Discount on Bonds Payable Cash 3. Interest Expense Discount on Bonds Payable CashExplanation / Answer
1 Cash 22318534 Discount on Bonds Payable 2081466 Bonds Payable 24400000 2 Interest Expense 669556 =22318534*6%/2 Discount on Bonds Payable 181556 Cash 488000 =24400000*4%/2 3 Interest Expense 675003 =(22318534+181556)*6%/2 Discount on Bonds Payable 187003 Cash 488000 Amount of the bond interest expense for the first year = 669556+675003= $1344559
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.