Question
I need help with this problem. My numbers are not right. Venezuela Co. is building a new hockey arena at a cost of $2,540,000. It
I need help with this problem. My numbers are not right.
Venezuela Co. is building a new hockey arena at a cost of $2,540,000. It received a downpayment of $520,900from local businesses to support the project, and now needs to borrow $2,019,100to complete the project. It therefore decides to issue $2,019,100of10%,10year bonds. These bonds were issued on January 1, 2013, and pay interest annually on each January 1. The bonds yield9%. Venezuela paid $60,600in bond issue costs related to the bond sale.
(a) Prepare the journal entry to record the issuance of the bonds and the related bond issue costs incurred on January 1, 2013. (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.)
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Venezuela Co. is building a new hockey arena at a cost of $2,540,000. It received a downpayment of $520,900 from local businesses to support the project, and now needs to borrow $2,019,100 to complete the project. It therefore decides to issue $2,019,100 of 10%, 10 year bonds. These bonds were issued on January 1, 2013, and pay interest annually on each January 1. The bonds yield 9%. Venezuela paid $60,600 in bond issue costs related to the bond sale. (a) Prepare the journal entry to record the issuance of the bonds and the related bond issue costs incurred on January 1, 2013. (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 January 1, 2013 Account Titles and Explanation Debit Credit Cash Unamortized B 60600 Bonds Payable 2019100 No Entry (b) Prepare a bond amortization schedule up to and including January 1, 2017, using the effective interest method. (Round answers to 0 decimal places, e.g. 38,548.) Date 1/1/13 1/1/14 Cash Paid Interest Expense $ Carrying Amount of Bonds Premium Amortization $ $ $ 1/1/15 1/1/16 1/1/17 (c) Assume that on July 1, 2016, Venezuela Co. redeems half of the bonds at a cost of $1,092,200 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, 2016 (To record entry for accrued interest) July 1, 2016 (To record entry for bond issue costs) July 1, 2016 Debit Credit (To record reacquisition)Step by Step Solution
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