Fillberg Company issued five-year, 10 percent bonds with a face value of $10,000 on January 1, 2007. Interest is paid yearly on December 31. The market rate of interest on this date is 8%, & Fillberg Company receives proceeds of 10,803 dollar on the bond issuance.
Question:
Estimate the effect on the accounting equation of the payment of interest and the amortization of premium on December 31, 2009 (the third year), and estimate the balance sheet presentation of the bonds on that date.