Problem - Marin 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, 2016, and pay interest annually on each January 1. The bonds yield 10%.
Prepare the journal entry to record the issuance of the bonds on January 1, 2016.
Prepare a bond amortization schedule up to and including January 1, 2020, using the effective interest method.
Assume that on July 1, 2019, Marin Co. redeems half of the bonds at a cost of $1,049,200 plus accrued interest. Prepare the journal entry to record this redemption.