On July 1, Year 1, Danzer Industries Inc. issued $43,200,000 of
10-year, 9% bonds at a market (effective) interest rate of 10%,
receiving cash of $40,508,184. Interest on the bonds is payable
semiannually on December 31 and June 30. The fiscal year of the
company is the calendar year.

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Question: On July 1, Year 1, Danzer Industries Inc. issued $43,200,000 of 10-year, 9% bonds at a market (ef…
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Required:

1. Journalize the entry to record
the amount of cash proceeds from the issuance of the bonds on July
1, Year 1.*
2. Journalize the entries to
record the following:*

a. The first semiannual interest
payment on December 31, Year 1, and the amortization of the bond
discount, using the straight-line method. (Round to the nearest
dollar.)
b. The interest payment on June
30, Year 2, and the amortization of the bond discount, using the
straight-line method. (Round to the nearest dollar.)
3. Determine the total interest
expense for Year 1.
4. Will the bond proceeds always
be less than the face amount of the bonds when the contract rate is
less than the market rate of interest?
5. Compute the price of
$40,508,184 received for the bonds by using the present value
tables. (Round to the nearest dollar.)

*Refer to the Chart of Accounts for exact wording of account
titles.

CHART
OF ACCOUNTS
Danzer Industries Inc.
General Ledger
ASSETS
110 Cash
111 Petty Cash
121 Accounts Receivable
122 Allowance for Doubtful
Accounts
126 Interest Receivable
127 Notes Receivable
131 Merchandise Inventory
141 Office Supplies
142 Store Supplies
151 Prepaid Insurance
191 Land
192 Store Equipment
193 Accumulated Depreciation-Store
Equipment
194 Office Equipment
195 Accumulated Depreciation-Office
Equipment
LIABILITIES
210 Accounts Payable
221 Salaries Payable
231 Sales Tax Payable
232 Interest Payable
241 Notes Payable
251 Bonds Payable
252 Discount on Bonds Payable
253 Premium on Bonds Payable
EQUITY
311 Common Stock
312 Paid-In Capital in Excess of
Par-Common Stock
315 Treasury Stock
321 Preferred Stock
322 Paid-In Capital in Excess of
Par-Preferred Stock
331 Paid-In Capital from Sale of
Treasury Stock
340 Retained Earnings
351 Cash Dividends
352 Stock Dividends
390 Income Summary
REVENUE
410 Sales
610 Interest Revenue
611 Gain on Redemption of Bonds
EXPENSES
510 Cost of Merchandise Sold
515 Credit Card Expense
516 Cash Short and Over
521 Sales Salaries Expense
522 Office Salaries Expense
531 Advertising Expense
532 Delivery Expense
533 Repairs Expense
534 Selling Expenses
535 Rent Expense
536 Insurance Expense
537 Office Supplies Expense
538 Store Supplies Expense
541 Bad Debt Expense
561 Depreciation Expense-Store
Equipment
562 Depreciation Expense-Office
Equipment
590 Miscellaneous Expense
710 Interest Expense
711 Loss on Redemption of Bonds

Question: On July 1, Year 1, Danzer Industries Inc. issued $43,200,000 of10-year, 9% bonds at a market (ef...

Question: On July 1, Year 1, Danzer Industries Inc. issued $43,200,000 of10-year, 9% bonds at a market (ef...

Question: On July 1, Year 1, Danzer Industries Inc. issued $43,200,000 of10-year, 9% bonds at a market (ef...

Question: On July 1, Year 1, Danzer Industries Inc. issued $43,200,000 of10-year, 9% bonds at a market (ef...

Question: On July 1, Year 1, Danzer Industries Inc. issued $43,200,000 of10-year, 9% bonds at a market (ef...

Show transcribed image text Present Value Tables Two present value tables are provided Present Value of $1 at Compound Interest Due in n Periods and Present Value of Ordinary Annuity of $1 per Peri od. Use them as d rected in the problem requirements Present Value of $1 at Compound Interest Due in n periods periods 4.0% 4.5% 5% 5.50% 6% 6.50% 7% 0.96154 0.95694 0.95238 0.94787 0.94340 0.93897 0.93458 0.92456 0.91573 0.90703 0.89845 0.89000 0.88166 0.87344. 0.88900 0.87630 0.86384 0.85161. 0.83962 0.82785 0.81630 0.85480 0.83856 0.82270 0.80722 0.79209 0.77732 0.76290 0.82193 0.80245 0.78353 0.76513 0.74726 0.72988 0.71299 0.76790 0.74622 0.72525 0.70496 0.68533 0.66634 0.79031. 0.75992 0.73483 0.71068 0.68744 66506 0.64351 0.62275 0.73069 0.70319 0.67684 0.65160 0.62741 0.60423 0.58201. 0.70259 0.67290 64461 61763 0.59190 0.56735 0.54393 0.67556 0.64393 61391 0.58543 0.55839 0.53273 0.50835 10 11 0.64958 61620 0.58468 0.55491. 0.52679 0.50021. 0.47509 12 0.62460 0.58966 0.55684. 0.52598 0.49697 0.46968 0.44.401. 0.60057 0.56427 0.53032 0.49856 0.46884 0.44102 0.41496 13 0.47257 0.44230 0.41410 0.38782 14 0.57748 0.53997 0.50507 0.55526 0.51672 0.48102 0.44793 0.41727 0.38883 0.36245 16 0.53391. 0.49447 0.45811. 0.42458 0.39365 0.36510 0.33873 17 0.51337 0.47318 0.43630 0.40245 0.37136 0.34281 0.31657 0.45280 0.41552 0.38147 0.35034 0.32189 0.29586 18 0.49363 19 0.47464 0.43330 0.39573 0.36158 0.33051. 0.30224 0.27651 20 0.45639 0.41464. 0.37689 0.34273 0.31180 0.28380 0.25842 21 0.43883 0.39679 0.35894 0.32486 0.29416 0.26648 0.24151. 22 0.42196 0.37970 0.34185 0.30793 0.27751 0.25021. 0.22571 0.26180 0.23494 0.2109s 23 0.40573 0.36335 0.32557 0.29187 0.27666 0.24698 0.22060 0.19715 24 0.39012 0.34770 0.31007 25 0.37512 0.33273 0.29530 0.26223 0.23300 0.20714 0.18425 0.36069 0.31840 0.28124 0.24856 0.21981. 19450 0.17220 26 0.34682 0.30469 0.26785 0.23560 0.20737 0.18263 0.16093 27 0.25509 0.22332 0.19563 0.17148 0.15040 28 0.33348 0.29157 29 0.32065 0.27902 0.24295 0.21168 0.18456 16101 0.14056 30 0.30832 0.26700 0.23138 0.20064. 0.17411. 15119 0.13137 0.29646 0.25550 0.22036 0.19018 16425 14196 0.12277 31

Present Value Tables Two present value tables are provided Present Value of $1 at Compound Interest Due in n Periods and Present Value of Ordinary Annuity of $1 per Peri od. Use them as d rected in the problem requirements Present Value of $1 at Compound Interest Due in n periods periods 4.0% 4.5% 5% 5.50% 6% 6.50% 7% 0.96154 0.95694 0.95238 0.94787 0.94340 0.93897 0.93458 0.92456 0.91573 0.90703 0.89845 0.89000 0.88166 0.87344. 0.88900 0.87630 0.86384 0.85161. 0.83962 0.82785 0.81630 0.85480 0.83856 0.82270 0.80722 0.79209 0.77732 0.76290 0.82193 0.80245 0.78353 0.76513 0.74726 0.72988 0.71299 0.76790 0.74622 0.72525 0.70496 0.68533 0.66634 0.79031. 0.75992 0.73483 0.71068 0.68744 66506 0.64351 0.62275 0.73069 0.70319 0.67684 0.65160 0.62741 0.60423 0.58201. 0.70259 0.67290 64461 61763 0.59190 0.56735 0.54393 0.67556 0.64393 61391 0.58543 0.55839 0.53273 0.50835 10 11 0.64958 61620 0.58468 0.55491. 0.52679 0.50021. 0.47509 12 0.62460 0.58966 0.55684. 0.52598 0.49697 0.46968 0.44.401. 0.60057 0.56427 0.53032 0.49856 0.46884 0.44102 0.41496 13 0.47257 0.44230 0.41410 0.38782 14 0.57748 0.53997 0.50507 0.55526 0.51672 0.48102 0.44793 0.41727 0.38883 0.36245 16 0.53391. 0.49447 0.45811. 0.42458 0.39365 0.36510 0.33873 17 0.51337 0.47318 0.43630 0.40245 0.37136 0.34281 0.31657 0.45280 0.41552 0.38147 0.35034 0.32189 0.29586 18 0.49363 19 0.47464 0.43330 0.39573 0.36158 0.33051. 0.30224 0.27651 20 0.45639 0.41464. 0.37689 0.34273 0.31180 0.28380 0.25842 21 0.43883 0.39679 0.35894 0.32486 0.29416 0.26648 0.24151. 22 0.42196 0.37970 0.34185 0.30793 0.27751 0.25021. 0.22571 0.26180 0.23494 0.2109s 23 0.40573 0.36335 0.32557 0.29187 0.27666 0.24698 0.22060 0.19715 24 0.39012 0.34770 0.31007 25 0.37512 0.33273 0.29530 0.26223 0.23300 0.20714 0.18425 0.36069 0.31840 0.28124 0.24856 0.21981. 19450 0.17220 26 0.34682 0.30469 0.26785 0.23560 0.20737 0.18263 0.16093 27 0.25509 0.22332 0.19563 0.17148 0.15040 28 0.33348 0.29157 29 0.32065 0.27902 0.24295 0.21168 0.18456 16101 0.14056 30 0.30832 0.26700 0.23138 0.20064. 0.17411. 15119 0.13137 0.29646 0.25550 0.22036 0.19018 16425 14196 0.12277 31

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