On January 1, 2019, Island Choppers Inc. issued $1,500,000 of 5% 10-year, callable bonds priced to yield 4 %.

The bonds may be called at 105 on or after December 31, 2022. Interest is payable on July 1 and January 1.

Island Choppers Inc. calls 10% of the bonds on August 1, 2025, (Note: they must also pay the interest accrued to that point on those bonds)

1. Prepare an amortization schedule for 2019 2029.
2. Prepare proper journal entries for the following:
   1. Issuance of the bonds for cash on January 1, 2019
   2. For the period of July 1, 2019 to January 1, 2021.
      1. Adjusting entries (December 31 Year-end).
      2. Interest payments and amortization (effective interest method) of premium/discount
   3. On Redemption August 1, 2025:
      1. Accrual of interest to the date of redemption for bonds being called
      2. Payment to bondholders, including interest

Recognition of gain or loss at on August 1, 2025