Exercise 10-17A (Algo) Straight-line amortization of a bond premium LO 10-5 Stuart Company issued bonds with a $191,000 face value on January 1, Year 1. The bonds had a 7 percent stated rate of interest and a five-year term. Interest is paid in cash annually, beginning December 31, Year 1. The bonds were issued at 103. 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 premium and the cash payment, affect the company's financial statements. (Use + for increase or - for decrease. In the Statement of Cash Flows column, use the initials OA to designate operating activity, IA for investing activity, and FA for financing activity. Not all cells require input.) Balance Sheet Event No. Effect of Transactions on Financial Statements Income Statement Stockholders Revenue Equity Expense Statement of Cali Flow Assets Liabilities Net Income 2 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. b. Carrying value c. Interest expense d. Carrying value e. Interest expense