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Venezuela Co. is building a new hockey arena at a cost of $24,000,000. It received a downpayment of $6,000,000 from local businesses to support the
Venezuela Co. is building a new hockey arena at a cost of $24,000,000. It received a downpayment of $6,000,000 from local
businesses to support the project, and now needs to borrow $18,000,000 to complete the project. It therefore decides to issue $18,000,000 of 12.00% 10 -year bonds. These bonds were issued on January 1, 2021, and pay interest annually on each January 1.
The bonds yield 8.00% .
Instructions:
(a) Prepare the journal entry to record the issuance of the bonds and the related bond issue costs
incurred on January 1, 2021.
(b) Prepare a bond amortization schedule up to and including January 1, 2024, using the effective interest method."
(c) Assume that on Jan 2, 2024, Venzuela Co. retires half of the bonds at a cost of $11,000,000 plus accrued interest.
Prepare the journal entry to record this retirement.
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