Question
Novak Co. is building a new hockey arena at a cost of $2,750,000. It received a downpayment of $470,000 from local businesses to support the
Novak Co. is building a new hockey arena at a cost of $2,750,000. It received a downpayment of $470,000 from local businesses to support the project, and now needs to borrow $2,280,000 to complete the project. It therefore decides to issue $2,280,000 of 10%, 10-year bonds. These bonds were issued on January 1, 2016, 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, 2016.
b) Prepare a bond amortization schedule up to and including January 1, 2020, using the effective interest method
c) Assume that on July 1, 2019, Novak Co. redeems half of the bonds at a cost of $1,222,500 plus accrued interest. Prepare the journal entry to record this redemption
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