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 $4\mathrm{.}5\%.$

$$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.$$

$$