13 Feb Amortization of PremiumAssume the same set of fact
Amortization of PremiumAssume the same set of facts for Stacy Company as in Problem 10-2 except that the market rateof interest of January 1, 2008, is 8% and the proceeds from the bond issuance equal $10,803.Required1. Prepare a five-year table (similar to Exhibit 10-5) to amortize the premium using the effectiveinterest method.2. What is the total interest expense over the life of the bonds? cash interest payment? premiumamortization?3. Prepare the journal entry for the payment of interest and the amortization of premium onDecember 31, 2010 (the third year), and determine the balance sheet presentation of the bondson that date.