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Venezula Co. is building a new hockey arena at a cost of $2,500,000. It received a deposit of $500,000 from local businesses to support the project, and now needs to borrow $2,000,000 to complete the project. It decides to issue $2,000,000 of 10.5% 10-year bonds. These bonds were issued on January 1, 2009 and pay interest annually on each January 1. The bonds yield 10%. Venezula paid $50,000 in bond issue costs related to the bond sale.

(1) Prepare journal entry to record the issuance of the bonds and the related bond issue costs incurred January 1, 2009

(2) Prepare a bond ammortization schedule up to and including January 1, 2013 usinf effective interest method

(3) Assume that on July 1, 2012 Venezula Co retires half of the bonds at a cost of $1,065,000 plus accrued interest. Prepare the journal entry to record this statement.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M990317

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