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Prepare the journal entry to record this redemption

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Question - Cheyenne Co. is building a new hockey arena at a cost of $ 2,750,000. It received a downpayment of $ 350,000 from local businesses to support the project, and now needs to borrow $ 2,400,000 to complete the project. It therefore decides to issue $ 2,400,000 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%.

Required -

(a) Prepare the journal entry to record the issuance of the bonds on January 1, 2019.

(b) Prepare a bond amortization schedule up to and including January 1, 2023, using the effective interest method.

(c) Assume that on July 1, 2022, Cheyenne Co. redeems half of the bonds at a cost of $ 1,273,900 plus accrued interest. Prepare the journal entry to record this redemption.

Reference no: EM133053390

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