Moncton Manufacturing Ltd. had the following information available on bonds payable outstanding at December 31, 2013, its year end:

• $7,500,000-Bonds Payable, 6 percent, interest paid on April 2 and October 2. The bonds had been sold on October 2, 2013, for $7,330,686 when the market rate of interest was 7 percent. The bonds mature on April 2, 2016.

The following transactions took place after December 31, 2013:

2014 Jan. 2 Moncton Manufacturing Ltd. signed a lease to rent a building for expansion of its operations. The lease is for six years, with an option to renew, and calls for annual payments of $37,500 per year payable on January

2. Moncton Manufacturing Ltd. gave a cheque for the first year upon signing the lease.

2 Moncton Manufacturing Ltd. signed a lease for equipment. The lease is for 10 years with payments of $22,500 per year payable on January 2 (first year's payment was made at the signing). At the end of the lease, the equipment will become the property of Moncton Manufacturing Ltd. The future payments on the lease have a present value (at 10 percent) of $129,578. The equipment has a 10-year useful life and zero residual value.

Apr. 2 Paid the interest on the bonds payable and amortized the discount using the effective-interest method. Assume interest payable of $112,500 had been accrued on December 31, 2013.

Oct. 2 Paid the interest on the bonds payable and amortized the discount using the effective-interest method.

Dec. 31 Recorded any adjustments required at the end of the year for the bonds payable and the lease(s).

2015 Jan. 2 Made the annual payments on the leases.

Apr. 2 Paid the interest on the bonds payable and amortized the discount using the effective-interest method.

Oct. 2 Paid the interest on the bonds payable and amortized the discount using the effective-interest method.

Dec. 31 Recorded any adjustments required at the end of the year for the bonds payable and the lease(s).

Required

1. For the bonds issued on October 2, 2013, prepare an amortization schedule for the life of the bonds. Round all amounts to the nearest whole dollar.

2. Record the general journal entries for the 2014 and 2015 transactions.

3. Show the liabilities section of the balance sheet on December 31, 2015.