On January 1, 2013, Mead Company issued bonds with a face value of $100,000, a stated rate of interest of 9 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 8 percent at the time the bonds were issued. The bonds sold for $103,993. Mead used the effective interest rate method to amortize bond premium.
Required:
a. Prepare an amortization table as shown below:
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b. What item(s) in the table would appear on the 2016 balance sheet?
c. What item(s) in the table would appear on the 2016 income statement?
d. What item(s) in the table would appear on the 2016 statement of cash flows?