On July 1,201, Darzer Industries inc. issued $47,500,000 of 10-year, 10% bonds at a market...
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On July 1,201, Darzer Industries inc. issued $47,500,000 of 10-year, 10% bonds at a market (effective) interest rate of 12%, receiving cash of $42,051,560. Interest on the bonds is payable semannually on December 31 and June 30 . The fiscal yoar of the compamy is the calendar year. Required: 1. Joumakize the entry to record the amount of cash proceeds from the issuance of the bonds on duly 1,20Vt. 2. Joumalize the entries to record the following: a. The first semiannual interest payment on December 31,20Y, and the amortization of the bond discount, using the straight-line method. b. The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straigh-line method: 3. Determine the total interest expense for 20Yt. 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is loss than the market rate of interest? 5. Compute the price of $42,051,560 received for the bonds by using the present value tables
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