Reference no: EM13826894
XYZ Company is building a new baseball stadium at a cost of $5,000,000. It received a down payment of $3,000,000 from local businesses to support the project, and now needs to borrow $2,000,000 to complete the project. It therefore decides to issue $2,000,000 of 8%, 10-year bonds. These bonds were issued on January 1, 2010, and pay interest semi-annually on each January 1 and July 1, beginning 2010. The bonds yield 10%.
Required:
a) Prepare the journal entry to record the issuance of the bonds on January 1, 2010.
b) Prepare a bond amortization schedule up to and including January 1, 2015, using the effective-interest method.
c) Assume that on July 2, 2014, XYZ Company retires all of the bonds at a cost of $1,900,000. Prepare the journal entry to record this retirement.
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