- On The First Day Of Its Fiscal Year Jacinto Company Issued 20 000 000 Of Five Year 5 Bonds To Finance Its Operations 1 (29.4 KiB) Viewed 15 times
On the first day of its fiscal year, Jacinto
Company issued $20,000,000 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 Jacinto
Company receiving cash of $18,336,705. a. Journalize the entries to record the following: 1. Issuance of the bonds. 2. First semiannual interest payment. The bond discount amortization is combined with the semiannual interest payment. 3. 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. 1. 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 $18,336,705 rather than for the face amount of $20,000,0007 The market rate of interest is the contract rate of interest.