Metlock Inc. is building a new hockey arena at a cost of $2,000,000. It received a down
Question:
Required: a) Using factor tables, calculate the value of the bonds and prepare the journal entry to record the issuance of the bonds on January 1, 2020. (Present value of an annuity of 1 for 10 years, 10% discounted rate is 6.14457 and single sum of present value is 0.38554).
b) Prepare a bond amortization schedule up to and including January 1, 2025, using the effective interest method.
c) Assume that on July 1, 2023, the company retires half of the bonds at a cost of $852,000 plus accrued interest. Prepare the journal entries to record this retirement.
d) What are the advantages of an installment note compared with an interest bearing note, especially from the lenders perspective?
Intermediate Accounting
ISBN: 978-0470423684
13th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, and Terry D. Warfield