Question

Riverbed Co. is building a new hockey arena at a cost of $2,750,000. It received a downpayment of $470,000 from local businesses to support the project, and now needs to borrow $2,280,000 to complete the project. It therefore decides to issue $2,280,000 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%.

A) 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.)

Date	Account Titles and Explanation	Debit	Credit
January 1, 2019

B) 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.)

Date		Cash Paid		Interest Expense		Premium Amortization		Carrying Amount of Bonds
1/1/19		$		$		$		$
1/1/20
1/1/21
1/1/22
1/1/23

C) Assume that on July 1, 2022, Riverbed Co. redeems half of the bonds at a cost of $1,222,500 plus accrued interest. Prepare the journal entry to record this redemption. (Round answers to 0 decimal places, e.g. 38,548. 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.)

Date	Account Titles and Explanation	Debit	Credit
July 1, 2022
	(To record interest)
July 1, 2022
	(To record reacquisition)

PLEASE PROVIDE STEPS AND EXPLANATION WITH ANSWERS. THANK YOU!

Answer 1

Present value of the bond issue = Annual interest payment x PVIFA _9%,10years + Maturity amount x PVIF _{9%, 10th year}

= 228,000 x 6.4177+ 2,280,000 x 0.4224 = $ ( 1,463,235.6 + 963,072) = $ 2,426,307.6

A) Journal entry to record the bond issuance:

Date	Particulars	Debit	Credit
		$	$
January 1, 2019	Cash	2,426,307.6
	Bonds payable		2,280,000
	Premium on bonds payable		146,307.6

B) Bond amortization schedule:

Date	Interest paid	Interest expense	Bond premium amortized	Bond carrying value
	$	$	$	$
January 1, 2019				2,426,307.6
January 1 2020	228,000	218,367.69	9,632.31	2,416,675.29
January 1 2021	228,000	217,500.78	10,499.22	2,406,176.07
January 1, 2022	228,000	216,555.85	11,444.15	2,394,731.92
January 1, 2023	228,000	215,525.87	12,474.13	2,382,257.79
January 1, 2024	228,000	214,403.20	13,596.80	2,368,660.99
January 1, 2025	228,000	213,179.49	14,820.51	2,353,840.48

C) Journal entry for part redemption of bonds:

Date	Particulars	Debit	Credit
		$	$
July 1, 2022	Bonds payable	1,140,000
	Premium on bonds payable	54,247.43
	Interest expense	53,881.47
	Loss on redemption of bonds payable	31,371.10
	Cash $ ( 1,222,500 + 228,000/4)		1,279,500

I HOPE IT USEFUL TO YOU IF YOU HAVE ANY DOUBT PLZ COMMENT GIVE ME UP-THUMB. THANKS....