investment because Baker has the intent and the ability to hold the bonds for $10$ years. The effective rate on the bonds is $4\mathrm{.}5\%.$

Amortization Schedule

Journal Entries and Balance Sheet Presentation

a$.$ Were the bonds purchased at a discount or premium?

b$.$ Prepare a bond amortization schedule for Year $1$ and Year $2$ using the effective interest method.

Note: Round each amount entered into the schedule to the nearest whole dollar.