On January 1, 2021, Surreal Manufacturing issued 540 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, 2023. On the issue date, the market interest rate was 4 percent, so the total proceeds from the bond issue were $525,017. Surreal uses the simplified effective-interest bond amortization method and adjusts for any rounding errors when recording interest in the final year.

Changes During the Period			Ending Bond Liability Balances
Period Ended	Interest Expense	Cash Paid	Discount Amortized	Bonds Payable	Discounts on Bonds Payable	Carriying Value
01/01/21						$0
12/31/21	$23,334	$18,000	$5,334			0
12/31/22	23,547	18,000	5,547			0
12/31/23	23,767	18,000	5,767			0

1. 1. Prepare a bond amortization schedule.

2. 2-5. Prepare the journal entries to record the bond issue, the interest payments on December 31, 2021 and 2022, the 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 101.

No	Date	General Journal	Debit	Credit
1	January 01, 2021	Cashselected answer correct	588,686selected answer incorrect	not attempted
		Discount on Bonds Payableselected answer correct	11,314selected answer incorrect	not attempted
		Bonds Payableselected answer correct	not attempted	600,000selected answer correct
2	December 31, 2021	Interest Expenseselected answer correct	23,334selected answer correct	not attempted
		Discount on Bonds Payableselected answer correct	not attempted	5,334selected answer correct
		Cashselected answer correct	not attempted	18,000selected answer correct
3	December 31, 2022	Interest Expenseselected answer correct	23,547selected answer correct	not attempted
		Discount on Bonds Payableselected answer correct	not attempted	5,547selected answer correct
		Cashselected answer correct	not attempted	18,000selected answer correct
4	December 31, 2023	Interest Expenseselected answer correct	23,767selected answer correct	not attempted
		Discount on Bonds Payableselected answer incorrect	not attempted	5,767selected answer incorrect
		Cashselected answer correct	not attempted	18,000selected answer incorrect
5	January 01, 2023	Bonds Payableselected answer correct	not attempted	not attempted
		Discount on Bonds Payableselected answer incorrect	not attempted	5,767selected answer incorrect
		Cashselected answer correct	not attempted	606,000selected answer correct