Assume the same facts as PA10-7, except that Surreal uses the simplified effective-interest bond amortization method, as

Question:

Assume the same facts as PA10-7, except that Surreal uses the simplified effective-interest bond amortization method, as shown in Chapter Supplement 10C.

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, 2018 and 2019.

4. Give the journal entry to record the interest and face value payment on December 31, 2020.

5. Assume the bonds are retired on January 1, 2020, at a price of 101. Give the journal entry to record the bond retirement.

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the...

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