Venezuela Co. is building a new hockey arena at a cost of

Venezuela Co. is building a new hockey arena at a cost of $2500000. It received a downpayment of $500000 from local businesses to support the project and now needs to borrow $2000000 to complete the project. It therefore decides to issue $2000000 of 10.5% 10-year bonds. These bonds were issued on January 1 2013 and pay interest annually on each January 1. The bonds yield 10%. Venezuela paid $50000 in bond issue costs related to the bond sale. Instructions (a) Prepare the journal entry to record the issuance of the bonds and the related bond issue costs incurred on January 1 2013. (b) Prepare a bond amortization schedule up to and including January 1 2017 using the effective-interest method. (c) Assume that on July1 2016 Venezuela Co. redeems half of the bonds at a cost of $1065000 plus accrued interest. Prepare the journal entry to record this redemption.

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