Berkley Corporation issued bonds and received cash in full for the issue price. The bonds were dated and issued on January 1. 2003. The stated interest rate was payable at the end of each year. The bonds mature at the end of four years. The following schedule has been completed (amounts in thousands):

Required: 1. Complete the amortization schedule. 2. What was the maturity amount of the bonds? 3. How much cash was received at date of issuance (sale) of the bonds? 4. Was there a premium or a discount? If so. which and how much? 5. How much cash will be disbursed for interest each period and in total for the full life of the bond issue? 6. What method of amortization is being used? Explain. 7. What is the stated rate of interest? 8. What is the effective rate of interest? 9. What amount of interest expense should be reported on the income statement each year? 10. Show how the bonds should be reported on the balance sheet at the end of each year (show the last year immediately before retirement of the bonds). 11. Why is the method of amortization being used preferable to other methods? When must it be used?

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Date Cash Interest Amortization Balance January 1, 2003 $6.101 End of year 2003 $450 $427 $23 6,078 End of year 2004 End of year 2005 450 End of year 2006 450 450 ??? ? 6.053 ? 6.000