Venzuela Co. is building a new hockey arena at a cost of \($2\),500,000. It received a down payment of \($500\),000 from local businesses to support the project and now needs to borrow \($2\),000,000 to complete the project. It therefore decides to issue \($2\),000,000 of 10.5%, 10-year bonds. These bonds were issued on January 1, 2014, and pay interest annually on each January 1. The bonds yield 10%.

Instructions

(a) Prepare the journal entry to record the issuance of the bonds on January 1, 2014.

(b) Prepare a bond amortization schedule up to and including January 1, 2018.

(c) Assume that on July 1, 2017, Venzuela Co. retires half of the bonds at a cost of \($1\),065,000 plus accrued interest. Prepare the journal entry to record this retirement.