Skysong Co. is building a new hockey arena at a cost of $2,310,000. It received a downpayment of $490,000 from local businesses to support the project, and now needs to borrow $1,820,000 to complete the project. It therefore decides to issue $1,820,000 of 12%, 10-year bonds. These bonds were issued on January 1, 2019, and pay interest annually on each January 1. The bonds yield 11%. Assume that on July 1, 2022, Skysong Co. redeems half of the bonds at a cost of $1,001,900 plus accrued interest. Prepare the journal entry to record this redemption. (to record Interest and to record reacquisition)
Skysong Co. is building a new hockey arena at a cost of $2,310,000. It received a downpayment of $490,000 from local businesses to support the project, and now needs to borrow $1,820,000 to complete the project. It therefore decides to issue $1,820,000 of 12%, 10-year bonds. These bonds were issued on January 1, 2019, and pay interest annually on each January 1. The bonds yield 11%. Assume that on July 1, 2022, Skysong Co. redeems half of the bonds at a cost of $1,001,900 plus accrued interest. Prepare the journal entry to record this redemption. (to record Interest and to record reacquisition)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Skysong Co. is building a new hockey arena at a cost of $2,310,000. It received a downpayment of $490,000 from local businesses to support the project, and now needs to borrow $1,820,000 to complete the project. It therefore decides to issue $1,820,000 of 12%, 10-year bonds. These bonds were issued on January 1, 2019, and pay interest annually on each January 1. The bonds yield 11%.
Assume that on July 1, 2022, Skysong Co. redeems half of the bonds at a cost of $1,001,900 plus accrued interest. Prepare the journal entry to record this redemption. (to record Interest and to record reacquisition)
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