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Prepare the journal entry to record the issuance of the bond

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Larkspur Co. is building a new hockey arena at a cost of $2,680,000. It received a downpayment of $500,000 from local businesses to support the project, and now needs to borrow $2,180,000 to complete the project. It therefore decides to issue $2,180,000 of 10%, 10-year bonds.

These bonds were issued on January 1, 2016, 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, 2016.

B) Prepare a bond amortization schedule up to and including January 1, 2020 using the effective interest rate method.

C) Assume that on July 1, 2019, Larkspur Co. redeems half of the bonds at cost of $1,156,700 plus accrued interest. Prepare the journal entries to record this redemption.

Reference no: EM131765171

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