Problem 14-2 (Part Level Submission)

Riverbed Co. is building a new hockey arena at a cost of $2,370,000. It received a downpayment of $520,000 from local businesses to support the project, and now needs to borrow $1,850,000 to complete the project. It therefore decides to issue $1,850,000 of 10%, 10-year bonds. These bonds were issued on January 1, 2016, and pay interest annually on each January 1. The bonds yield 9%.

Prepare the journal entry to record the issuance of the bonds on January 1, 2016. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Prepare a bond amortization schedule up to and including January 1, 2020, using the effective interest method. (Round answers to 0 decimal places, e.g. 38,548.). Date: 1/1/16, 1/1/17, 1/1/18, 1/1/19, 1/1/20 . Calculate using those dates to answer: Cash paid, interest expense, premium amortization , carrying amount of bonds