On January 1, 2015, Methodical Manufacturing issued 100 bonds, each with a face value of $1,000, a stated interest rate of 8 percent paid annually on December 31, and a maturity date of December 31, 2017. On the issue date, the market interest rate was 7.25 percent, so the total proceeds from the bond issue were $101,959. Methodical uses the straight-line bond amortization method and adjusts for any rounding errors when recording interest in the final year.

Prepare a bond amortization schedule and then complete the required journal entries to record the bond issue, interest payments on December 31, 2015 and 2016, bond retirement. Assume the bonds are retired on Jan 1, 2017 at a price of 102.