XYZ Company is building a new baseball stadium at a cost of $3,500,000. It will receive a grant (for the balance it needs) from a local business to support the project, after borrowing money to complete the project. It decides to issue $3,000,000 of 10%, 10-year bonds. These bonds were issued on January 1, 2010, and pay interest annually on each January 1, beginning 2011. The bonds yield 8%.

Required:

Prepare the journal entry to record the issuance of the bonds on January 1, 2010. (6 points)

Prepare a bond amortization schedule up to and including January 1, 2015, using the effective-interest method. (9 points)

Assume that on July 1, 2014, XYZ Company retires a half of the bonds at a cost of $1,500,000 plus accrued interest. Prepare the journal entry to record this retirement. (18 points)

How much will need to obtain from the local business? (2 points)