Venezuela Co. is building a ne w hockey arena at a cost of $2,50 0,000. It received a down payment o

Venezuela Co. is building a ne

w hockey arena at a cost of $2,50

0,000. It received a down

payment of $500,000 from local busin

esses to support the projec

t, and now needs to

borrow $2,000,000 to complete the proj

ect. It therefore decides

to issue

$2,000,000 of 8%, 10 year bonds. These bonds were issued on Jan

uary 1, 2014, and pay

interest annually on each Ja

nuary 1, starting January 1, 2015.

The bonds yield 10%.

Venezuela paid $48,000 in bond issue

costs related to the bond

sale.

Instructions

a)

Prepare the journal entry t

o record the issuance of the bonds a

nd the related bond

issue costs incurred on January 1, 2014.

b)

Prepare a bond amortization sch

edule up to and including Januar

y 1, 2018, using the

effective interest method.

c)

Assume that on July 1, 2017, Venezuel

a Co. redeems half of the

bonds at a cost of

$980,000 plus accrued interest. Prepare the journal entry to re

cord this redemption.