Exercise 10-17A Straight-line amortization of a bond premium LO 10-5 10 Doints Stuart Company issued bonds with a $77.000 face value on January 1 Yeart. The bonds had a 9 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-ne method is used for amortization Required 6. Use a financial statements mode like the one shown next 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, affect the company's financial statements. Use for increase or for decrease in the Cash Flow column, use the initials A to designate operating activity, IA for investing activity, and FA for financing activity Columns for events that have no effect on any of the elements should be left blank.) (Note: Not all cells will require an input.) Effect of Transactions on Financial Statements Balance Sheet Income Statement Liabilities Stockholders Revenue Equity ExpenNet income Event No Assets 1 2a 25 b. Determine the carrying value face value less discount or blus premium of the bond bity of December 31, 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 Year 2 .. Determine the amount of interest expense reported on the Year 2 income water Carrying Value Guspense Carrying