Houston Company issued a $10,000, three-year, 5 percent bond on January 1, 2011. The bond interest is

Question:

Houston Company issued a $10,000, three-year, 5 percent bond on January 1, 2011. The bond interest is paid each December 31. The bond was sold to yield 4 percent.

Required:

1. Complete a bond amortization schedule. Use the effective-interest method.

2. What amounts will be reported on the income statement and balance sheet at the end of 2011, 2012, and 2013?

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...