Question

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Entries for Issuing Bonds and Amortizing Discount by Straight-Line Method On the first day of its fiscal year, Chin Company issued $24,400,000 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 $22,370,780. a. Journalize 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. Round your answers to the nearest dollar 1. Cash Discount on Bonds Payable Bonds Payable 2. Interest Expense Discount on Bonds Payable 111 III III Cash 3 Interest Expense 812,922 ✓ Discount on Bonds Payable Cash ✓ 610,000

Answer 1

Journal entries

1:- Issuance of bond.

Cash	$22,370,780
Discount on bond payables	$2029220
Bond Payables		$24,400,000

2:- Recording of first semi annual interest.

Interest expenses	$812922
Discount on bond payables ($2029220/10)		$202922
Cash ($24,400,000 X 5℅ X 1/2)		$610000

​​​​​3:-Recording of second semi annual interest.

Interest expenses	$812922
Discount on bond payables		$202922
Cash		$610000

​​​​​​​Note: If you have any doubt please ask ?