On January 1, Year 1, Reese Incorporated issued bonds with aface value of $270,000, a stated rate of interest of 8 percent, anda five-year term to maturity. Interest is payable in cash onDecember 31 of each year. The effective rate of interest was 7percent at the time the bonds were issued. The bonds sold for$281,070. Reese used the effective interest rate method to amortizebond premium.
Required
Prepare an amortization table. What item in the table wouldappear on the Year 3 balance sheet? What item in the table wouldappear on the Year 3 income statement? What item and amount in thetable would appear on the Year 3 statement of cash flows (DirectMethod) and under which section of the statement of cash flowswould this item appear?
Complete this question by entering your answers in thetabs below.
b. What item in the table would appear on the Year 3 balancesheet?
c. What item in the table would appear on the Year 3 incomestatement?
d. What item and amount in the table would appear on the Year 3statement of cash flows (Direct Method) and under which section ofthe statement of cash flows would this item appear?
