On January 1, 2021, Methodical Manufacturing issued 100 bonds, each with a face value of $1,000, a stated interest rate of 7 percent paid annually on December 31, and a maturity date of December 31, 2023. On the issue date, the market interest rate was 6.25 percent, so the total proceeds from the bond issue were $101,995. Methodical uses the effective-interest bond amortization method and adjusts for any rounding errors when recording interest in the final year.

1. Prepare a bond amortization schedule.
2. 2-5. Prepare the journal entry to record the bond issue, interest payments on December 31, 2021 and 2022, interest and face value payment on December 31, 2023 and the bond retirement. Assume the bonds are retired on January 1, 2023, at a price of 103.

Req 1 Req 2 to 5 Prepare a bond amortization schedule. (Round your answers to the nearest whole dollar. Make sure that the Carrying value equals value of the bond in the last period. Interest expense in the last period will result in the amount in Premium Amortized equaling Premium on Bonds Payable.) Changes During the Period Ending Bond Liability Balances Period Ended Interest Expense Cash Paid Premium Amortized Bonds Payable Premium on Bonds Payable Carrying Value 01/01/21 $ 100,000 $ 1,995 $ 101,995 12/31/21 $ 6,375 $ 7,000 $ 625 100,000 1,370 101,370 12/31/22 6,336 7,000 664 100,000 706 100,706 12/31/23 6,294 7,000 706 100,000 0 100,000