Reference no: EM133124773

Question - Bonita Co. is building a new hockey arena at a cost of $2,620,000. It received a downpayment of $450,000 from local businesses to support the project, and now needs to borrow $2,170,000 to complete the project. It therefore decides to issue $2,170,000 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%.

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

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

3. Assume that on July 1, 2022, Bonita Co. redeems half of the bonds at a cost of $1,139,500 plus accrued interest. Prepare the journal entry to record this redemption.