On January 1 of the current year, Baker Corp. purchased $70,000 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? Premium - 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 Interest Interest Premium Bond Amortization Amortized Cost $ 72,770 Jan. 1, Year 1 Dec. 31, Year 1 $ Dec. 31, Year 2 $ 225 72,545 3,500 3,500 3,275 3,265 235 72,310 x Check On January 1 of the current year, Baker Corp purchased $70,000 of Chocolate Inc, bands. 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 C. Prepare the journal entry for the purchase of the investment on January 1. Date Account Name Jan. 1, Year 1 Investment in HTM Securities Cash To record purchase of investment. Dr. 70,000 0 Cr. OX 72,770 x d. Prepare the journal entries to record interest received on December 31 of Year 1 and December 31 of Year 2. Dr. Cr. 10 OX 10 X 10 X 0 Date Account Name Dec 31, Year 1 Cash Interest Revenue Investment in HTM Securities To record interest received Dec. 31. Year 2 Cash Interest Revenue Investment in HTM Securities To record interest received. 10 0 0 OX 10 x 10 X e. Indicate the carrying value of the Chocolate bonds on Baker's balance sheet on December 31, Year 2, assuming that the fair value of the bonds on that date was $72,800. So X