Business, 21.05.2020 21:10 jrstrom9090
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 semi-annually. 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 semi-annual interest payment. The bond discount is combined with the semi-annual interest payment.
3. Second semi-annual interest payment. The bond discount is combined with the semi-annual interest payment.
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 exist9, 594, 415 rather than for the face amount of exist10,000,000? .
Answers: 3
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On the first day of its fiscal year, Chin Company issued $10,000,000 of five-year, 7% bonds to finan...
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