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

Exercise 29

(Supplement 10C) Recording Bond Issue, Interest Payments (Simplified Effective-interest Amortization), and Early Bond Retirement
Assume the same facts as PB10-6, but now assume that Methodical uses the simplified effective-interest bond amortization method, as shown in 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, 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.