Prepare the journal entries for the issuance of the bonds

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XYZ Company is building a new hockey rink at a cost of $1,500,000. It received a down payment of $500,000 from local businesses in support of the project and now needs to borrow $1,000,000 to complete the project. It therefore decides to issue $1,000,000 of 10%, 5 year bonds. The bonds sold for $926,395. These bonds were issued on January 1, 2011 and pay interest semi annually on July 1 and January 1. The yield on the bond is 12%

1. Prepare the journal entries for the issuance of the bonds, and any related bond cost (if entry is required) for march 1, 2011
2. Prepare the bond amortization schedule up until January 1, 2012 using the effective interest method. The year end date for the company is December 31. Prepare journal entries as required
3. Assume that on July 1, 2014 XYZ retires all the bonds at 97. Record the entry of the sale

Reference no: EM13131605

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