on the first day of it's fiscal year, chin company issued $26,700,000 of 5 year,...
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on the first day of it's fiscal year, chin company issued $26,700,000 of 5 year, 10% bonds to finance it's operations of producing and selling home improvement products . interest is payable semi-annually. the bonds were issued at a market (effective) interest rate of 12%,resulting in chim company receiving cash of $24,734,733. a. journalize the entries to record the following. : 1. issuance of bonds 2. first semiannual interest payment. the bond discount amortization, using straight line method, is combined with the semiannual interest payment. 3. second semiannual interest payment. the bond discount amortization, using straight line, is combined with the semiannual interest payment. b. determine the amount of the bond interest expense for first year. c. why was the company able to issue the bonds for only $24,734,733 rather than face amount $26,700,000? the market rate of interest is the contract rate of interest.
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