Question
Metlock Inc. is building a new hockey arena at a cost of $2,000,000. It received a down payment of $400,000 from local businesses to support
Required: a) Using factor tables, calculate the value of the bonds and prepare the journal entry to record the issuance of the bonds on January 1, 2020. (Present value of an annuity of 1 for 10 years, 10% discounted rate is 6.14457 and single sum of present value is 0.38554).
b) Prepare a bond amortization schedule up to and including January 1, 2025, using the effective interest method.
c) Assume that on July 1, 2023, the company retires half of the bonds at a cost of $852,000 plus accrued interest. Prepare the journal entries to record this retirement.
d) What are the advantages of an installment note compared with an interest bearing note, especially from the lenders perspective?
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A Dr Cash 1609152 Cr Bonds Payable 1600000 Cr Premium on bonds payable 9152 B The ta...Get Instant Access to Expert-Tailored Solutions
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