ACCOUNTING 2-Headland Co. is building a new hockey arena at a cost
Question # 00584216
Posted By:
Updated on: 09/06/2017 06:27 AM Due on: 09/06/2017
Problem 14-2
Headland 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.)
Account Titles and
Explanation Date Debit Credit January 1, 2016 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 Cash
Paid Interest
Expense
$ Premium
Amortization
$ $ Carrying
Amount of
Bonds
$ 1/1/16 1/1/17 1/1/18 1/1/19 1/1/20
Assume that on July 1, 2019, Headland Co. redeems half of the bonds at a cost of $1,019,100 plus
accrued interest. Prepare the journal entry to record this redemption. (Round answers to 0
decimal places, e.g. 38,548. 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.)
Date Account Titles and
Explanation July 1, 2019 (To record interest)
July 1, 2019 (To record reacquisition) Debit Credit
Headland 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.)
Account Titles and
Explanation Date Debit Credit January 1, 2016 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 Cash
Paid Interest
Expense
$ Premium
Amortization
$ $ Carrying
Amount of
Bonds
$ 1/1/16 1/1/17 1/1/18 1/1/19 1/1/20
Assume that on July 1, 2019, Headland Co. redeems half of the bonds at a cost of $1,019,100 plus
accrued interest. Prepare the journal entry to record this redemption. (Round answers to 0
decimal places, e.g. 38,548. 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.)
Date Account Titles and
Explanation July 1, 2019 (To record interest)
July 1, 2019 (To record reacquisition) Debit Credit
-
Rating:
/5
Solution: ACCOUNTING 2-Headland Co. is building a new hockey arena at a cost