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Prepare the journal entry to record issuance of the bonds

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Question - Windsor Co. is building a new hockey arena at a cost of $2,620,000. It received a down-payment of $480,000 from local businesses to support the project, and now needs to borrow $2,140,000 to complete the project. It therefore decides to issue $2,140,000 of 12%, 10-year bonds. These bonds were issued on January 1, 2016, and pay interest annually on each January 1. The bonds yield 11%.

(a) Prepare the journal entry to record the issuance of the bonds on January 1, 2016.

(b) A bond amortization schedule up to and including January 1, 2020, using the effective interest method.

Reference no: EM132432089

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