ABC Co. is building a new hockey arena at a cost of $6,000,000. It received a down payment of $2,000,000 from local businesses to support the project and now needs to borrow $4,000,000 to complete the project. It therefore decides to issue $4,000,000 of 10.5%, 10-year bonds. These bonds were issued on January 1, 2020, and pay interest annually on each January 1. The bonds yield 10%.

QUESTION:

a) Prepare a bond amortization schedule.

b) Prepare the journal entries needed in 2020 and 2021. Assuming that on July 1, 2023, ABC Co. retires half of the bonds at a cost of $1,065,000 and the accrued interest. Prepare the journal entry to record this retirement