Question
On January 1, 2015, Surreal Manufacturing issued 520 bonds, each with a face value of $1,000, a stated interest rate of 3 percent paid annually
On January 1, 2015, Surreal Manufacturing issued 520 bonds, each with a face value of $1,000, a stated interest rate of 3 percent paid annually on December 31, and a maturity date of December 31, 2017. On the issue date, the market interest rate was 4 percent, so the total proceeds from the bond issue were $505,572. Surreal uses the simplified effective-interest bond amortization method and adjusts for any rounding errors when recording interest in the final year.Required: 1. Prepare a bond amortization schedule. (Do not round intermediate calculations. Round your answers to the nearest whole dollar. Make sure that the Carrying value equals to face value of the bond in the last period. Interest expense in the last period should be calculated as Cash Interest (+)/(-) Reduction in Bonds Payable, Net.) 2 - 5. Complete the required journal entries to record the bond issue, interest payments on December 31, 2015 and 2016, interest and face value payment on December 31, 2017, bond retirement. Assume the bonds are retired on January 1, 2017, at a price of 101.
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