Sheridan Inc. is building a new hockey arena at a cost of $2,150,000. It received a down payment of $430,000 from local businesses to support the project, and now needs to borrow $1.720,000 to complete the project. It therefore decides to issue $1,720,000 of 10- year, 10.5% bonds. These bonds were issued on January 1, 2023, and pay interest annually on each January 1. The bonds yield 10.5% to the investor and have an effective interest rate to the issuer of 10.40530 %. (There is an increased effective interest rate due to the capitalization of the bond issue costs.) Any additional funds that are needed to complete the project will be obtained from local businesses. Sheridan paid and capitalized $43,000 in bond issuance costs related to the bond issue. Sheridan prepares financial statements in accordance with IFRS.
Sheridan Inc. is building a new hockey arena at a cost of $2,150,000. It received a down payment of $430,000 from local businesses to support the project, and now needs to borrow $1.720,000 to complete the project. It therefore decides to issue $1,720,000 of 10- year, 10.5% bonds. These bonds were issued on January 1, 2023, and pay interest annually on each January 1. The bonds yield 10.5% to the investor and have an effective interest rate to the issuer of 10.40530 %. (There is an increased effective interest rate due to the capitalization of the bond issue costs.) Any additional funds that are needed to complete the project will be obtained from local businesses. Sheridan paid and capitalized $43,000 in bond issuance costs related to the bond issue. Sheridan prepares financial statements in accordance with IFRS.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Sheridan Inc. is building a new hockey arena at a cost of $2,150,000. It received a down payment of $430,000 from local businesses to
support the project, and now needs to borrow $1,720,000 to complete the project. It therefore decides to issue $1,720,000 of 10-
year, 10.5% bonds. These bonds were issued on January 1, 2023, and pay interest annually on each January 1. The bonds yield 10.5%
to the investor and have an effective interest rate to the issuer of 10.40530 %. ( There is an increased effective interest rate due to the
capitalization of the bond issue costs.) Any additional funds that are needed to complete the project will be obtained from local
businesses. Sheridan paid and capitalized $43,000 in bond issuance costs related to the bond issue. Sheridan prepares financial
statements in accordance with IFRS.
Transcribed Image Text:Prepare a bond amortization schedule up to and including January 1, 2028, using the effective interest method. (Round answers
to 0 decimal places, e.g. 5,275.)
Date
1/1/23
11/1/24
1/1/25
1/1/26
1/1/27
1/1/28
Cash Interest
180600
180600
180600
180600
180600
Effective Interest
180162
181446
182731
184017
Premium
Amortization
772
438
846
2131
3417
Cal
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