Jacobs Company issued bonds with a $160,000 face on January, Year 1. The bonds were issued at 105 and carried a 5-year term to maturity. They had 7% stated rate of interest that was payable in cash on December 31st of each year. Jacobs uses the straight-line method to amortize bond discounts and premiumsBased on this information alone, how does the recognition of interest expense during Year 1 affect the company's accounting equation?

Jacobs Company issued bonds with a $160,000 face value on January 1, Year 1. The bonds were issued at 105 and carried a 5-year term to maturity. They had a 7% stated rate of interest that was payable in cash on December 31st of each year. Jacobs uses the straight-line method to amortize bond discounts and premiums. Based on this information alone, how does the recognition of Interest expense during Year 1 affect the company's accounting equation? Multiple Choice O Decronses both assets and stockholders equity by $9,600 Decreases both assets and stockholders' equity by $11,200 Increases liabilities by $1600. decreases assets by $9,600, and decreases stockholders' equity by $11.200 Decreases stockholders equity by $9.500, decreases tablities by $1600, and decreases assets by $11.200