On January 1, 2021, Surreal Manufacturing issued 570 bonds, each with a face value of $1,000, a stated interest rate of 3 percent paidannually on December 31, and a maturity date of December 31, 2023. On the issue date, the market interest rate was 4 percent, so thetotal proceeds from the bond issue were $554,184. Surreal uses the effective-interest bond amortization method and adjusts for anyrounding 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 facevalue payment on December 31, 2023 and the bond retirement. Assume the bonds are retired on January 1, 2023, at a price of102.Complete this question by entering your answers in the tabs below.Req 1Req 2 to 5Prepare a bond amortization schedule. (Round your answers to the nearest whole dollar. Make sure that the Carrying value equalsface value of the bond in the last period. Interest expense in the last period will result in the amount in Discount Amortizedequaling Discount on Bonds Payable.)Changes During the PeriodEnding Bond Liability BalancesPeriodEndedInterestDiscountDiscount onCash PaidBonds PayableCarrying ValueExpenseAmortizedBonds Payable01/01/21$12/31/21$12/31/2212/31/23< Req 1Req 2 to 5 >OoO

1. Period Changes during the period Ending bond liability balances Interest expense…

On January 1, 2021, Surreal Manufacturing issued 570 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 $554,184. Surreal uses the effective-interest bond amortization method and adjusts for any rounding errors when recording interest in the final year. Required:

On January 1, 2021, Surreal Manufacturing issued 570 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 $554,184. Surreal uses the effective-interest bond amortization method and adjusts for any rounding errors when recording interest in the final year. Required:

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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