Week $5-$Chapter $11-$Long$-$term liabi

eBcok

$2.$ First semiannual interest payment, including amortization of premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.

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$$

$$

$$

$$

$$

$3.$ Second semiannual interest payment, including amortization of premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.

$$

$$

$$

$$

$$

$$

$$

$$

$$

b$.$ Determine the bond interest expense for the first year. Round to the nearest dollar.

Annual interest paid

Less premium amortized

Interest expense for first year

c$.$ Explain why the company was able to issue the bonds for $$32,559,061$ rather than for the face amount of $$30,000,000.$

The bonds sell for more than their face amount because the market rate of interest is $$ the contract rate of interest. Investors $$ willing to pay more for bonds that pay a higher rate of interest $($contract rate$)$ than the rate they could earn on similar bonds $($market rate$).$

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Veek $5-$Chapter $11-$Long$-$term liabi

eBook

Amortize premium by interest method Shunda's fiscal year begins on January $1.$ The company uses the interest method.

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

Sale of the bonds. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.

$$

$$

$$

$$

$$

$$

$$

$$

$$

First semiannual interest payment, including amortization of premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.

$$

$$

$$

$$

$$

$$

Second semiannual interest payment, including amortization of premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.

$$

$$

$$

$$

$$

$$

$$

$$

$$

Week $5-$Chapter $11-$Long$-$term liabi

eBook

$2.$ First semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.

$$

$$

$$

$$

$$

$$

$$

$$

$$

$3.$ Second semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.

$$

$$

$$

$$

$$

$$

$$

$$

$$

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

Annual interest paid

Discount amortized

Interest expense for first year

c$.$ Explain why the company was able to issue the bonds for only $524,040,207$ rather than for the face amount of $$26,000,000.$

The bonds sell for less than their face amount because the market rate of interest $$ the contract rate of interest. Investors $$ willing to pay the full face amount for bonds that pay a lower contract rate of interest than the rate they could earn on similar bonds $($market rate$).$

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Next

Amortize discount by interest method cash of $$24,040,207.$ The company uses the interest method.

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

Sale of the bonds. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.

First semiannual interest payment, including amortization