Chapter 11 Homework eBook GLOSS Discount on Bonds Payable Cash 1. EX. 11.08.ALGO 2. Ex. 11.09.ALGO EX 11.16. ALGO 4. EX.11.15 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 Interest Expense Discount on Bonds Payable Cash 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 $25,889,454 rather than for the face amount of $28,000,000 The bonds sell for less than their face amount because the market rate of interest is 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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