PC Inc., a public company following IFRS, issued 10-year bonds with a face value of $10,600,000 on

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Question:

PC Inc., a public company following IFRS, issued 10-year bonds with a face value of $10,600,000 on January 12021. The bonds pay 7% interest on a semi-annual basis every January 1 and July The bonds were issued to yield 6%. The bonds mature on January 12031. On April 1, 2023, 1/4 of the bonds were called at 107 plus accrued interest. PC Inc. uses the effective interest method to account for any bond premium or discount.

Required:

1. Calculate the amount at which the bonds were sold on January 1, 2021.

2. Prepare an amortization schedule for the first 5 interest payments following the issuance of the bonds.

3. Prepare PC Inc.'s journal entries to record each of the following:

a. The issuance of the bonds on January 1, 2021.

b. The payment of bond interest on July 1, 2021.

c. The repurchase and redemption of the bonds on April 1, 2023, including the payment of accrued interest on the retired bonds. Note that any entries pertaining to the bonds have been recorded to January 1, 2023.