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On January 1 of this year, Houston Company issued a bond with a face value of $12,000 and a coupon rate of 6 percent. The bond matures in 3 years and pays interest every December 31. When the bond was issued, the annual market rate of interest was 5 percent. Houston uses the effective-interest amortization method. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your final answer to whole dollars.)

Required:

1. Complete a bond amortization schedule for all three years of the bond's life. (Enter all values as positive values.)

2. What amounts will be reported on the income statement and balance sheet at the end of Year 1 and Year 2?

On January 1 of this year, Houston Company issued a bond with a face value of $12,000 and a coupon rate of 6 percent. The bond matures in 3 years and pays interest every December 31. When the bond was issued, the annual market rate of interest was 5 percent. Houston uses the effective-interest amortization method. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your final answer to whole dollars.) Required: 1. Complete a bond amortization schedule for all three years of the bond's life. (Enter all values as positive values.) Cash Interest Interest Expense Premium Amortization Book Value of Bond Date Jan. 01, Year 1 Dec. 31, Year 1 Dec. 31, Year 2 Dec. 31, Year 3 2. What amounts will be reported on the income statement and balance sheet at the end of Year 1 and Year 2? December 31 Interest expense Bond liability Year 1 Year 2

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