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On January 1 of this year, Olive Corporation issued bonds. Interest is payable once a year on December 31. The bonds mature at the end of four years. Olive uses the effective-interest amortization method. The partially completed amortization schedule below pertains to the bonds:

Date	Cash			Interest			Amortization				Balance
January 1, Year 1											$	34,563
End of Year 1	$	2,890		$	2,765		$	125				34,438
End of Year 2		?			?			?				34,303
End of Year 3		?			?			146				?
End of Year 4		?			2,733			?				34,000

1. Complete the amortization schedule.

2. When the bonds mature at the end of Year 4, what amount of principal will Olive Corporation pay investors?

Principal Amount:

3. How much cash was received on the day the bonds were issued (sold)?

Cash Received:

4. Were the bonds issued at a premium or a discount? If so, what was the amount of the premium or discount?

Premium or Discount?

What was the premium or discount amount?

5. How much cash will be disbursed for interest each period and in total over the life of the bonds?

Cash Disbursed Per Period:

Cash Disbursed In Total?

6. What was the annual market rate of interest on the date the bonds were issued?

Market Rate of Interest (in percentage):

7. What amount of interest expense will be reported on the income statement for Year 2 and Year 3?

Year Two:

Year Three:

8. What amount will be reported on the balance sheet at the end of Year 2 and Year 3?

Year Two:

Year Three:

Date Cash Interest Amortization Balance January 1, Year 1 End of Year 1 End of Year 2 End of Year 3 End of Year 4 34,563 34,438 34,303 2,890S 2,765 $ 125 S 146 2,733 34,000

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