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Diaz Company issued $80,000 face value of bonds on January 1 , Year 1 . The bonds had a 9 percent stated rate of interest

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Diaz Company issued $80,000 face value of bonds on January 1 , Year 1 . The bonds had a 9 percent stated rate of interest and a tenyear term. Interest is paid in cash annually, beginning December 31, Year 1. The bonds were issued at 96 . The straight-line method is used for amortization. Required: a. Use a financial statements model 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. Record the recognition of interest expense as transaction 2a and amortization of the discount and the cash payment as transaction 2b. 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. Complete this question by entering your answers in the tabs below. 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

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