Check my work Problem: Module 3 Textbook Problem 5 Learning Objective: 3-6 Using the straight-line method show how bonds issued at a discount affect financial statements Dlaz Company issued $96,000 face value of bonds on January 1 Year 1. The bonds had a 6 percent stated rate of interest and a ten year term. Interest is paid in cash annually, beginning December 31. Year 1. The bonds were issued at 99. The straight-line method is used for amortization Required a. 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 discount and the cash payment, affect the company's financial statements b. Determine the carrying value (face value less discount or plus premium) of the bond ability 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 (face value less discount or plus premium) of the bond ability 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. Red A Reg B to E 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 discount and the cash payment, affect the company's financial statements. (Use + for increase, - for decrease and if the element is not affected, 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 (PA) and if there is no effect, leave the cell blank. Not all cells will require entry) Hely Save & Exit d. Determine the carrying value (face value less discount or plus premium of the bond liability as of December 31 Year 2 e. Determine the amount of interest expense reported on the Year 2 income statement Check my work Complete this question by entering your answers in the tabs below. Rega Recto 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 discount and the cash payment, affect the company's financial statements. (use for increase for decrease and if the element is not affected, leave the cell blanc. In the Cash Flow column indicatie whether the item is an operating activity (OA), an investing activity (TA), or a financing activity (FA) and if there is no effect, tave the cell blank. Not all cells will require entry) DIAZ COMPANY Effect of Transactions on Financial Statement Balance Sheet Income Statement Liabilities Stockholders Equity Revenues Expenses Event No Assets Net Income Statement of Cash Flow 1. 20 2b Hote> Letpeise reported on the Year 2 income statement Complete this question by entering your answers in the tabs below. ROGA Reg 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 (face value less discount or plus premium) 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 . Carrying value c. Interest expense d. Carrying value e. Interest expense Reg A
