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On the first day of its fiscal year, Chin Company issued $24,100,000 of five year, 5% 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 7%, resulting in Chin receiving cash of $22,095,730. a. Joumalize 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. 1. Cash 22,095,730 Discount on Bonds Payable Bonds Payable 2. Interest Expense Discount on Bonds Payable Cash 3. Interest Expense Discount on Bonds Payable Cash 3. Second semiannual interest payment. The bond discount is combined with the semiannual interest payme nearest dollar) If an amount box does not require an entry, leave it blank. 1. Cash 22,095,730 Discount on Bonds Payable Bonds Payable 2. Interest Expense Discount on Bonds Payable Cash 3. Interest Expense Discount on Bonds Payable Cash b. Determine the amount of the bond interest expense for the first year. Entries for issuing Bonds and Amortizing Premium by Straight-Line Method Smiley Corporation wholesales repair products to equipment manufacturers. On April 1, 2011, Smiley issued $7,300,000 of B-year, 9% bonds at a market (effective) interest rate of 8%, receiving cash of $7,725,309. Interest is payable semiannually on April 1 and October 1. a. Journalize the entry to record the issuance of bonds on April 4, 2071. If an amount box does not require an entry, leave it blank. 59 b. Journalize the entry to record the first interest payment on October 1, 20Y1, and amortization of bond premium for six months, using the straight-line method. Round to the nearest dollar. If an amount box does not require an entry, leave it blank c. Why was the company able to issue the bonds for $7,725,309 rather than for the face amount of $7,300,000? The market rate of interest is the contract rate of interest. Mia Breen Corp. produces and sells wind-energy-driven engines. To finance its operations, Mia Breen issued $1,034,000 of 10-year, 10% callable bonds on May 1, 2045, at their face amount, with interest payable on May 1 and November 1. The fiscal year of the company is the calendar year Journalize the entries to record the following selected transactions: 2015 May 1 Issued the bonds for cash at their face amount Nov 1 Paid the interest on the bonds 2079 Nov. 1 Called the bond issue at 95, the rate provided in the bond Indenture. (Omit entry for payment of Interest.) If an amount box does not require an entry, leave it blank. Issued the bonds for cash at their face amount 2045 May 1 Paid the interest on the bonds. 2015 Nov. 1 Called the bond issue at 95, the rate provided in the bond indenture. (Omit entry for payment of interest.) 20Y5 May 1 Issued the bonds for cash at their face amount. Nov. 1 Paid the interest on the bonds. 2019 Nov. 1 Called the bond issue at 95, the rate provided in the bond Indenture. (Omit entry for payment of interest.) If an amount box does not require an entry, leave it blank, Issued the bonds for cash at their face amount. 2015 May 1 Paid the interest on the bonds. 20Y5 Nov. 1 Called the bond issue at 95, the rate provided in the bond indenture. (Omit entry for payment of interest.) 2049 Nov. 1

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