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, a
stated interest rate of 3 percent paid annually on December 31, and a maturity date of December
31, 2017. On the issue date, the market interest rate was 4 percent, so the total proceeds from
the bond issue were $583,352. 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. Give the
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 to
record the bond retirement
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