On January 1, 2018, Reese Incorporated issued bonds with a face value of $280,000, 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 $291,480. Reese used the effective interest rate method to amortize bond premium.

Required

1. Prepare an amortization table.
2. What item(s) in the table would appear on the 2020 balance sheet?
3. What item(s) in the table would appear on the 2020 income statement?
4. What item(s) and amount in the table would appear on the 2020 statement of cash flows (Direct Method) and under what section the bond liability appear?

Amortization Schedule
	Cash Payment	Interest Expense	Premium Amortization	Carrying Value
January 1, 2018				291,480
December 31, 2018	22,400	20,404	1,996	289,484
December 31, 2019	not attempted	not attempted	not attempted	not attempted
December 31, 2020	not attempted	not attempted	not attempted	not attempted
December 31, 2021	not attempted	not attempted	not attempted	not attempted
December 31, 2022	not attempted	not attempted	not attempted	not attempted
Totals	112,000	100,519	11,480

b.	Carrying value Bond Liabilities	not attempted
c.	not attempted	not attempted
d.	not attempted	not attempted	na