Venezuela Co. is building a new hockey arena at a cost of $9,000,000. It received a downpayment of $2,000,000 from local businesses to support the project, and now needs to borrow $7,000,000 to complete the project. It therefore decides to issue $7,000,000 of 12% 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 $5,000,000 plus accrued interest. Prepare the journal entry to record this retirement.

B C 1 Venezuela Co. is building a new hockey arena at a 2 cost of $9,000,000 A . It received a downpayment of E F $2,000,000 $7,000,000 12.00% 3 $7,000,000 of businesses to support the project, and now needs to borrow 4 the project. It therefore decides to issue 5-year bonds. These bonds were issued on January 1, 2021, and pay interest annually on each 6 January 1. The bonds yield 8.00% 7 8 9 10 Instructions: 11 (a) Prepare the journal entry to record the issuance of the bonds and the related bond issue costs incurred on January 1, 2021. 12 13 14 15 16 17 18 19 20 21 from local to complete 10 21 22 (b) Prepare a bond amortization schedule up to and including January 1, 2024, using the effective interest method. 23 24 Date Interest Paid Entry for reacquisition Interest Expense Premium Amortization 25 26 27 28 29 30 31 (c) Assume that on Jan 2, 2024, Venzuela Co. retires half of the bonds at a cost of 32 plus accrued interest. Prepare the journal entry to record this retirement. 33 34 35 36 37 38 39 40 Bond Carrying Value $5,000,000