Assignment:
Palmiero Co. is building a new hockey arena at a cost of $2,000,000. It received a down payment of $500,000 from local businesses to support the project, and now needs to borrow $1,500,000 to complete the project. It therefore decides to issue $1,500,000 of 10.5%, 10-year bonds. These bonds were issued on January 1, 2009, and pay interest on each January 1. The bonds yield 10%. Sluggers paid $50,000 in bond issue costs related to the bond sale.
Prepare the journal entry to record the issuance of the bonds and the related bond issue costs incurred on January 1, 2009.
Provide complete and step by step solution for the question and show calculations and use formulas.