On January 1, 2015, Surreal Manufacturing issued 600 bonds, each with a face value of $1,000, astated interest rate of 3 percent paid annually on December 31, and a maturity date of December31, 2017. On the issue date, the market interest rate was 4 percent, so the total proceeds fromthe bond issue were $583,352. Surreal uses the effective-interest bond amortization method andadjusts for any rounding errors when recording interest in the final year.Required:1. Prepare a bond amortization schedule.2. Give the journal entry to record the bond issue.3. Give the journal entries to record the interest payments on December 31, 2015 and 2016.4. Give the journal entry to record the interest and face value payment on December 31, 2017.5. Assume the bonds are retired on January 1, 2017, at a price of 101. Give the journal entry torecord the bond retirement

On January 1, 2015, Surreal Manufacturing issued 600 bonds, each with a face value of $1,000, astated interest rate of 3 percent paid annually on December 31, and a maturity date of December31, 2017. On the issue date, the market interest rate was 4 percent, so the total proceeds fromthe bond issue were $583,352. Surreal uses the effective-interest bond amortization method andadjusts for any rounding errors when recording interest in the final year.Required:1. Prepare a bond amortization schedule.2. Give the journal entry to record the bond issue.3. Give the journal entries to record the interest payments on December 31, 2015 and 2016.4. Give the journal entry to record the interest and face value payment on December 31, 2017.5. Assume the bonds are retired on January 1, 2017, at a price of 101. Give the journal entry torecord the bond retirement

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 4EA: On January 1, 2018, Wawatosa Inc. issued 5-year bonds with a face value of $200,000 and a stated...

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