Prepare the journal entry to record the redemption

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Waterway Co. is building a new hockey arena at a cost of $2,430,000. It received a downpayment of $490,000 from local businesses to support the project, and now needs to borrow $1,940,000 to complete the project. It therefore decides to issue $1,940,000 of 11%, 10-year bonds. These bonds were issued on January 1, 2019, and pay interest annually on each January 1. The bonds yield 10%.

Question 1: Assume that on July 1, 2022, Waterway Co. redeems half of the bonds at a cost of $1,049,200 plus accrued interest. Prepare the journal entry to record this redemption.

                            Dr                     Cr

interest expense _______

premium on bonds payable. _______

cash                        53350

Reference no: EM132482285

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