Reference no: EM133056994
Question - Grouper Co. is building a new hockey arena at a cost of $ 2,730,000. It received a down payment of $ 470,000 from local businesses to support the project, and now needs to borrow $2,260,000 to complete the project. It therefore decides to issue $ 2,260,000 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%.
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, Grouper Co. redeems half of the bonds at a cost of $ 1,193,900 plus accrued interest. Prepare the journal entry to record this redemption.
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