Cheyenne Co. is building a new hockey arena at a cost of $2,460,000. It received a down payment of $500,000 from local businesses to support the project, and now needs to borrow $1,960,000 to complete the project. It therefore decides to issue $1,960,000 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%.

(a)

Prepare the journal entry to record the issuance of the bonds on January 1, 2019. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date Account Titles and Explanation Debit Credit

January 1, 2019 Cash 2,085,786

Bonds Payable 1,960,000

Premium on Bonds Payable 125,786

(b)

a bond amortization schedule up to and including January 1, 2023, using the effective interest method. (Round answers to 0 decimal places, e.g. 38,548.)

Date Cash Paid Interest Expense Premium Amortization Carrying Amount of Bonds

1/1/19 $ $ $ $2,085,787

1/1/20 196,000 187,721 8,279 2,077,508

1/1/21 196,000 186,976 9,024 2068,484

1/1/22 196,000 186,164 9,836 2,058,647

1/1/23 196,000 185,278 10,722 2,047,925

(c)

Assume that on July 1, 2022, Cheyenne Co. redeems half of the bonds at a cost of $1,057,800 plus accrued interest. Prepare the journal entry to record this redemption. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date Account Titles and Explanation Debit Credit

July 1, 2022

(To record interest)

July 1, 2022

(To record reacquisition)