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Problem: Module 3 Textbook Problem 7 Learning Objective: 3-7 Using the straight-line method show how bonds issued at a premium affect financial statements The Square Foot Grit, Inc, issued $231,000 of 10 year 6 percent bonds on January 1, Year t, at 102. Interest la payable in cash annunty on December 31. The straight-line method is used for amortization, Required a. Use a financial statements model like the one shown below to demonstrate how (t) the January 1, Year 1, bond issue and the December 31, Year 1 recognition of interest expense, including the amortization of the premium and the cash payment, affects the company's financial statements. Use for increase. - for decrease, and there is no effect, leave the cell blank b. Determine the carrying value (face value less discount or plus premium of the bond lability as of December 31 Year 1 c. Determine the amount of interest expense reported on the Year Income statement d. Determine the carrying value of the bond liability as of December 31, Year 2 e. Determine the amount of interest expense reported on the Year 2 income statement Complete this question by entering your answers in the tabs below. RAGA Regs to Use a financial statements model like the one shown below to demonstrate how (1) the January 1, Year), bonds and (2) the December 31 Year 1, recognition of interest expense, including the amortization of the premium and the cash payment, affects the company's financial statements. Use for increase, - for decrease, and there is no effect, leave the cell blank. (In the Cash Flow column, indicate whether the item is an operating activity (OA) an investing activity (A), or a financing activity (FA) and if there is no effect, leave the cell. Not cells will require entry.) SQUARE FOOT GRILL, INC Efect of Transactions on Financial Statements Balance Sheet Income Statement 0.5 points Complete this question by entering your answers in the tabs below. Reg A Reg toe P Use a financial statements model like the one shown below to demonstrate how (1) the January 1, Year 1, bond issue and (2) the December 31, Year 1, recognition of interest expense, including the amortization of the premium and the cash payment, affects the company's financial statements. Use + for increase, - for decrease, and if there is no effect, leave the cell blank. (In the cash flow column, indicate whether the item is an operating activity (OA), an investing activity (IA), or a financing activity (FA) and if there is no effect, leave the cell bank. Not all cells will require entry) Show SQUAREFOOT GRILL, INC Effect of Tranctions on Financial Statements Balance Sheet Income Statement Stockholder Liabilities Revenue Expense Equity Event NA Nel Income Statement of Cash Flow Assets 1. 2a. 2b Regt > Complete this question by entering your answers in the tabs below. Req A Req B to E b. Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, Year 1. c. Determine the amount of Interest expense reported on the Year 1 Income statement. d. Determine the carrying value of the bond liability as of December 31, Year 2. e. Determine the amount of Interest expense reported on the Year 2 income statement. Show less b. Carrying value Year 1 c. Interest expense Year 1 d. Carrying value Year 2 e. Interest expense Year 2