On July 1, Hanover Company issued $2,000,000 of 10-year, 6% bonds at an effective interest rate of 5%. This netted the company $2,154,435. Interest on the bonds is payable annually on July 1. The president of Hanover has asked you to develop an amortization schedule worksheet (file name AMORT) that will use the effective interest method to calculate annual interest expense, premium (or discount) amortization, unamortized premium (or discount), and bond carrying amount. Your worksheet should include a Data Section.

Check figure: Amortization of bond premium, tenth year, $19,048.

To test your model, calculate the annual interest expense, discount amortization, unamortized discount, and bond carrying amount of $700,000 of 10-year, 7.5% bonds at an effective interest rate of 8%. The issuance of these bonds netted the company $676,515. Interest on the bonds is payable annually. Print the worksheet when done. Check figure: Amortization of bond discount, tenth year, $3,241.

Please show all the formulas.