Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

PA10-8 (Algo) (Supplement 10C) Recording Bond Issue, Interest Payments (Simplified Effective Interest Amortization), and Early Bond Retirement [LO 10-53] On January 1, 2021, Surreal Manufacturing

image text in transcribedimage text in transcribed

PA10-8 (Algo) (Supplement 10C) Recording Bond Issue, Interest Payments (Simplified Effective Interest Amortization), and Early Bond Retirement [LO 10-53] On January 1, 2021, Surreal Manufacturing issued 530 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 $515,294. 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. 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 103. Answer is not complete. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 to 5 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 (+)/(-) Increase in Bonds Payable, Net.) End of Year Period Beginning of Year Bonds Payable, Net $ 515,294 520,006 524,906 Changes During the Period Increase in Interest Expense Cash Paid Bonds Payable, Net 20,612 $ 15,900 $ 4,712 20,800 15,900 4,900 20,996 15,900 5,096 $ 01/01/21 - 12/31/21 01/01/22 - 12/31/22 01/01/23 - 12/31/23 Bonds Payable, Net $ 520,006 524,906 530,002 Answer is not complete. Complete this question by entering your answers in the tabs below. Reg 1 Reg 2 to 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 103. (Do not round intermediate calculations. If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Round your answers to the nearest whole dollar.) Show less No Credit 1 Date General Journal January 01, 2021 Cash Discount on Bonds Payable Bonds Payable, Net Debit 515,294 14,706 530,000 2 20,612 December 31, 202 Interest Expense Cash Discount on Bonds Payable 15,900 4,712 3 20,800 December 31, 202 Interest Expense Cash Discount on Bonds Payable 15,900 4,900 4 20,996 December 31, 202 Interest Expense Cash Discount on Bonds Payable 15,900 X 5,096 5 January 01, 2023 Bonds Payable, Net Gain on Bond Retirement Cash 524,906 20,994 545,900

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managing Financial Resources

Authors: Mick Broadbent, John Cullen

3rd Edition

1138134546, 978-1138134546

More Books

Students also viewed these Accounting questions

Question

=+c. Savings as the Star focus on price.

Answered: 1 week ago

Question

=+b. Product-Focused emphasize product features.

Answered: 1 week ago