On January 1, Year 1, Reese Incorporated issued bonds with a face value of $220,000, 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 $229,020. Reese used the effective interest rate method to amortize bond premium.

Required

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

Prepare an amortization table. Amortization Schedule Cash Interest Premium Payment Expense Amortization Date Carrying Value 229,020 227,451 17,600 16,031 1,569 January 1, Year 1 December 31, Year 1 December 31, Year 2 December 31, Year 3 December 31, Year 4 December 31, Year 5 Totals 17,600 16,031 1,569 b. What item in the table would appear on the Year 3 balance sheet? c. What item in the table would appear on the Year 3 income statement? d. What item and amount in the table would appear on the Year 3 statement of cash flows (Direct Method) and under which section of the statement of cash flows would this item appear? Show less b. C. d