Chin Company Assignment | College Homework Help

lomework Chapter 11 Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method 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 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 is combined with the semiannual interest payment. (Round your answer to the nearest dollar.) 3. 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. 9,594,415 1. Cash Discount on Bonds Payable Bonds Payable 405,585 Interest Expense Discount on Bonds Payable Cash 3. Interest Expense Discount on Bonds Payable Check My Work – U v2.cengagenow.com/ilm/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSession… R Homework Chapter 11 Discount on Bonds Payable Cash V Feedback Check My Work Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account. The straight- line method of amortization provides equal amounts of amortization over the life of the bond. 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 $9,594,415 rather than for the face amount of $10,000,000? The market rate of interest is the contract rate of interest. Therefore, inventors full face amount of the bonds. willing to pay the Feedback Check My Work b. Remember that the amortization of a bond discount or premium affects the amount of interest expenses recorded. c. Bonds will be issued for either a higher or lower amount than the face value when the market and contract rates of interest are different. Check My Work

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