### Explain effect on the accounting equation of the payment

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Explain Effect on the accounting equation of the payment of interest and the amortization of premium

Stacy Company issued five-year, 10% bonds with a face value of \$10,000 on January 1, 2007. Interest is paid annually on December 31. The market rate of interest on this date is 8%, and Stacy Company receives proceeds of \$10,803 on the bond issuance.

Question:

Determine the effect on the accounting equation of the payment of interest and the amortization of premium on December 31, 2009 (the third year), and determine the balance sheet presentation of the bonds on that date

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