On January 1, Year 1, Hart Company issued bonds with a face value of $150,000, a stated rate of interest of 8 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 7 percent at the time the bonds were issued. The bonds sold for $156,150. Hart used the effective interest rate method to amortize the bond premium. 

Required
a. Prepare an amortization table as shown next:

b. What item(s) in the table would appear on the Year 4 balance sheet?
c. What item(s) in the table would appear on the Year 4 income statement?
d. What item(s) in the table would appear on the Year 4 statement of cash flows?

Transcribed Image Text:

Cash Payment Interest Expense Carrying Value Premium Amortization 156,150 155,081 January 1, Year 1 December 31, Year 1 December 31, Year 2 December 31, Year 3 December 31, Year 4 December 31, Year 5 Totals 10,931 1,069 12,000 ? ? ? 6,150 60,000 53,850