Problem 14-1 The following amortization and interest schedule reflects the issuance of 10-year bonds by Pharoah Corporation on January 1, 2011, and the subsequent interest payments and charges. The company's year-end is December 31, and financial statements are prepared once yearly. Amortization Schedule Amount Carrying Year Cash Interest Unamortized Value 1/1/2011 $13,866 108,834 2011 $12,270 $13,060 13,076 109,624 2012 12,270 13,155 12,19 110,509 2013 12,270 13,261 11,200 111,500 2014 12,270 13,380 10,090 112,610 113,853 2015 12,270 13,513 8,847 7,455 115,245 2016 12,270 13,662 2017 12,270 13,829 5,896 116,804 4,150 118,550 2018 12,270 14,016 14,226 2019 12,270 2,194 120,506 2020 12,270 14,464 122,700 (a) Indicate whether the bonds were issued at a premium or a discount. (b) Indicate whether the amortization schedule is based on the straight-line method or the effective-interest method