Fundamentals of Financial Accounting 4th Edition by Fred Phillips,Robert Libby,Patricia Libby

Exercise 79

(Supplement 10B) Recording Bond Issue, Interest Payments (Effective-interest Amortization), and Early Bond Retirement
Refer to PB10-6. Assume Methodical uses the effective-interest bond amortization method.
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, 2012 and 2013.
4. Give the journal entry to record the interest and face value payment on December 31, 2014.
5. Assume the bonds are retired on January 1, 2014, at a price of 101. Give the journal entry to record the bond retirement.