Make the journal entries to record the bond issue

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On January 1,2018 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 31,2020. 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 simplified effective interest bond amortization method and adjusts for any recording interest in the final.

Problem 1: Prepare the journal entries to record the bond issue, the interest payments on December 31,2018 and 2019 the interest and the face value payment on December 31, 2020 and the bond retirement. Assume the bonds are retired on January 1, 2020 at price of 101 Journal Entry 1 record the issuance of 630 bonds at face value of $1,000 each for $612,519.

Reference no: EM132806964

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