1) Prepare bond amortization schedule. 2)Record Journal entries Jan 1, 2015- Rec
ID: 2426478 • Letter: 1
Question
1) Prepare bond amortization schedule.
2)Record Journal entries
Jan 1, 2015- Record issuance of 630 bonds at a face value $1000 each for $612519
Dec 31, 2015- Record interest payment.
Dec 31, 2016- Record interest payment.
Dec 31, 2017- Record the interest and face value payment.
Jan 1,2017- Record the retirement of bonds at a quoted price of $101, assuming bonds are retired on Jan 1, 2017.
On January 1, 2015, Surreal Manufacturing issued 630 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 $612,519. Surreal uses the effective-interest bond amortization method and adjusts for any rounding errors when recording interest in the final year Required 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.) Changes During the Period Ending Bond Liability Balances Interest Expense Diount Bonds Payable Bonds Payable Discount on Carrying Value Period Cash Paid Ended 01/01/15 12/31/15 12/31/16 12/31/17 AmortizedExplanation / Answer
Changes During the period Ending Bond Liability Balances Period Ended Interest Expense @ 4% on carrying value Cash Paid Discount Amortized Bonds Payable Discount on Bonds payable Carrying Value 01/01/2015 $ 630,000 $ 17,481 $ 612,519 12/31/2015 $ 24,501 $ 18,900 $ 5,601 $ 630,000 $ 11,880 $ 618,120 12/31/2016 $ 24,725 $ 18,900 $ 5,825 $ 630,000 $ 6,055 $ 623,945 12/31/2017 $ 24,955 $ 18,900 $ 6,055 $ 630,000 $ - $ 630,000 Note: Discount = Bonds Payable-Cash Received 630000-612519 = 17481 Journal Date Description Debit Credit Jan 1,2015 Cash $ 612,519 Discount on bonds payable $ 17,481 Bonds Payable $ 630,000 Dec 31, 2015 Interest Expense $ 24,501 Cash $ 18,900 Discount on bonds payable $ 5,601 Dec 31, 2016 Interest Expense $ 24,725 Cash $ 18,900 Discount on bonds payable $ 5,825 Dec 31, 2017 Interest Expense $ 24,955 Cash $ 18,900 Discount on bonds payable $ 6,055 Dec 31, 2017 Bonds Payable $ 630,000 Cash $ 630,000 Jan 1, 2017 Bonds Payable $ 630,000 Loss on retirement of bonds $ 6,685 Cash $ 630,630 Discount on bonds payable $ 6,055
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