On January 1, Year 1, Hart Company issued bonds with a face value of $150,000, 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 $156,150. Hart used the effective interest rate method to amortize the bond premium.
Note: Round your intermediate calculations and final answers to the nearest whole number.
Required:
Prepare an amortization table.
What is the carrying value that would appear on the Year 4 balance sheet?
What is the interest expense that would appear on the Year 4 income statement?
What is the amount of cash outflow for interest that would appear in the operating activities section of the Year 4 statement of cash flows?
