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Determine the amount of the bond interest expense

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Reference no: EM133004244

On the first day of its fiscal year, Jacinto Company issued $13,100,000 of five-year, 12% 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 14%, resulting in Jacinto Company receiving cash of $12,179,919.

Problem 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

Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account. The straight-line method of amortization provides equal amounts of amortization over the life of the bond.

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

Reference no: EM133004244

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