On January 1, 2021, Surreal Manufacturing issued 600 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 $583,352 Surreal uses the 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 Prepare a bond amortization schedule 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

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On January 1, 2021, Surreal Manufacturing issued 600 bonds, each with a face value of $1,000, a stated interest rate of 3 percent paid annually

On January 1, 2021, Surreal Manufacturing issued 600 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 $583,352. Surreal uses the 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. Prepare a bond amortization schedule.
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