Question

On January 1, Year 1, Hart Company issued bonds with a face value of $110,000, a stated rate of interest of 12 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 11 percent at the time the bonds were issued. The bonds sold for $114,065. Hart used the effective interest rate method to amortize the bond premium.

Prepare an amortization table.

Answer 1

Answer:

Bond amortization table is attached with this answer please find it.

Explanation:

When the Bond is issued on the price more than its face value, the extra amount from face value received is called Bond Premium.

This premium is amortised over bond's life to maturity. It is adjusted in the interest payment to reduce the interest expense of each period.