Question

Oriole Co. is building a new hockey arena at a cost of $2,420,000. It received a downpayment of $510,000 from local businesses to support the project, and now needs to borrow $1,910,000 to complete the project. It therefore decides to issue $1,910,000 of 10%, 10-year bonds. These bonds were issued on January 1, 2019, and pay interest annually on each January 1. The bonds yield 9%.

1. Prepare the journal entry to record the issuance of the bonds on January 1, 2019. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

2. Prepare a bond amortization schedule up to and including January 1, 2023, using the effective interest method. (Round answers to 0 decimal places, e.g. 38,548.)

3. Assume that on July 1, 2022, Oriole Co. redeems half of the bonds at a cost of $1,040,600 plus accrued interest. Prepare the journal entry to record this redemption.

Answer 1