On January 1, 2011, Crume Incorporated issued bonds with a face value of \(\$ 100,000\), a stated rate of interest of 9 percent, and a five-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 8 percent at the time the bonds were issued. The bonds sold for \(\$ 103,993\). Crume used the effective interest rate method to amortize bond discount.

Required

a. Prepare an amortization table as shown below:

b. What item(s) in the table would appear on the 2013 balance sheet?

c. What item(s) in the table would appear on the 2013 income statement?

d. What item(s) in the table would appear on the 2013 statement of cash flows?

Transcribed Image Text:

Cash Interest Payment Expense Premium Amortization Carrying Value January 1, 2011 103,993 December 31, 2011 9,000 8,319 681 103,312 December 31, 2012 ? ? ? ? December 31, 2013 ? ? ? December 31, 2014 ? ? ? December 31, 2015 ? ? Totals 45,000 41,007 3,993