60.1K

Verified Solution

Link Copied!

On the first day of its fiscal year, Jacinto Company issued $$12,900,000$ of five$-$year, $8\%$ 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 $10\%,$ resulting in Jacinto Company receiving cash of

$$11,903,852.$

a$.$ Journalize the entries to record the following:

Issuance of the bonds.

First semiannual interest payment. The bond discount amortization is combined with the semiannual interest payment.

Second semiannual interest payment. The bond discount amortization is combined with the semiannual interest payment.

If an amount box does not require an entry, leave it blank. Round your answers to the nearest dollar.

b$.$ Determine the amount of the bond interest expense for the first year. Round your answer to the nearest dollar.

$

c$.$ Why was the company able to issue the bonds for only $$11,903,852$ rather than for the face amount of $$12,900,000?$

The market rate of interest is

the contract rate of interest. Retained Earnings Statement

Pressure Pumps Corporation, a manufacturer of industrial pumps, reports the following results for the year ended January $31,20Y2$ :

Retained earnings, February $1,20Y1$

Net income

Cash dividends declared

Stock dividends declared

$$421,600$

$54,800$

$9,900$

$18,600$

Prepare a retained earnings statement for the fiscal year ended January $31,20Y2.$

Pressure Pumps Corporation

Retained Earnings Statement

For the Year Ended January $31,20Y2$

Answer & Explanation Solved by verified expert

See Answer