On January 1 of the current year, Baker Corp. purchased $50,000 of Chocolate Inc. bonds. These bonds pay 5% interest annually on December 31 and mature in ten years on December 31. The investment is classified as a held-to-maturity investment because Baker has the intent and the ability to hold the bonds for 10 years. The effective rate on the bonds is 4.5%.

• Amortization Schedule
• Journal Entries and Balance Sheet Presentation

a. Were the bonds purchased at a discount or premium? AnswerDiscountPremium b. Prepare a bond amortization schedule for the current year (Year 1) and the following year (Year 2) using the effective interest method. Note: Round each amount entered into the schedule to the nearest whole dollar.

Date	Stated	Market	Premium	Bond
	Interest	Interest	Amortization	Amortized Cost
Jan. 1, Year 1
Dec. 31, Year 1
Dec. 31, Year 2