On January 1, 2021, Surreal Manufacturing Issued 500 bonds, each with a face value of $1,000,...

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On January 1, 2021, Surreal Manufacturing Issued 500 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 $486,127. 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. On January 1, 2021, Surreal Manufacturing Issued 500 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 $486,127. 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 rating: 100% (QA)

To prepare the bond amortization schedule we need to calculate the interest expense and amortization of the bond discount or premium for each year Given the information provided lets calculate the nec... View the full answer