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: 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 102. Answer is complete and correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2 to 5 Prepare a bond amortization schedule. (Round your answers to the nearest whole dollar. Make sure that the Carrying value equals face value of the bond in the last period. Interest expense in the last period will result in the amount in Discount Amortized equaling Discount on Bonds Payable.)
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: 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 102. Answer is complete and correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2 to 5 Prepare a bond amortization schedule. (Round your answers to the nearest whole dollar. Make sure that the Carrying value equals face value of the bond in the last period. Interest expense in the last period will result in the amount in Discount Amortized equaling Discount on Bonds Payable.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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I forgot how to get the, interest expense. How can I solve this part ? What do I need to multiply?
Transcribed Image Text:On January 1, 2021, Surreal Manufacturing issued 570 bonds, each with a face value of $1,000, a stated interest rate of 3 percent pald
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:
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
102.
Answer is complete and correct.
Complete this question by entering your answers in the tabs below.
Req 1
Req 2 to 5
Prepare a bond amortization schedule. (Round your answers to the nearest whole dollar. Make sure that the Carrying value equals
face value of the bond in the last period. Interest expense in the last period will result in the amount in Discount Amortized
equaling Discount on Bonds Payable.)
Ending Bond Liabillty Balances
Discount on
Bonds Payable
Changes During the Period
Discount
Amortized
Bonds
Payable
Period
Carrying
Value
Interest
Cash Paid
Ended
Expense
01/01/21
570,000
15,816
554,184
12/31/21
22,167
17,100
5,067
570,000
10,749 O
559,251
12/31/22
22,370
17,100
5,270
570,000
5,479 O
564,521
12/31/23
22,579
17,100
5,479
570,000
570,000
( Reg 1
Req 2 to 5 >
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