Problem 10-32A (Static) Effect of bond transactions on financial statements LO 10-4, 10-5 The three typical accounting events associated with borrowing money through a bond issue are: 1. Exchanging the bonds for cash on the day of issue. 2. Making cash payments for interest expense and recording amortization when applicable. 3. Repaying the principal at maturity. Required a. Assuming the bonds are issued at face value, show the effect of each of the three events on the financial statements using a horizontal statements model like the following one. Use + for increase or - for decrease. Columns for events that have no effect on any of the elements should be left blank. b. Repeat the requirements in Requirement a, but assume instead that the bonds are issued at a discount. c. Repeat the requirements in Requirement a, but assume instead that the bonds are issued at a premium. Note: In the Statement of Cash Flows column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). Not all cells will require an input. Answer is complete and correct. \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline \multicolumn{13}{|c|}{ Bonds hasued at face Value } \\ \hline \multicolumn{13}{|c|}{ Effect of Transactionx on Financial statements } \\ \hline Number & Assets & = & Lablities & + & \begin{tabular}{l} Stockholders' \\ Equity \end{tabular} & Rovenue & - & Expenses & = & \begin{tabular}{l} Net \\ Income \end{tabular} & \begin{tabular}{l} Statemen \\ Cash Flo \end{tabular} & \\ \hline 1. & +0 & & +0 & + & & & - & & = & & +0 & FA O \\ \hline 2. & =0 & m & & + & 0 & & - & 0 & = & -0 & -0 & \\ \hline 3. & -0 & = & 0 & + & & & - & & \# & & -0 & FA 0 \\ \hline \end{tabular} Answer is not complete. \begin{tabular}{|c|c|c|c|c|c|c|c|c|c|c|c|c|c|} \hline \multicolumn{14}{|c|}{ Bonds Issued at a Discount } \\ \hline \multicolumn{14}{|c|}{ Effect of Transuctions on Financial Statements } \\ \hline Number & Assets & = & Llabilities & * & \begin{tabular}{c} Stockholders' \\ Equily \end{tabular} & Revenue & - & Expenses & = & \begin{tabular}{c} Net \\ Ineome \end{tabular} & & \begin{tabular}{l} Statement \\ Cash Flo \end{tabular} & \\ \hline 1. & +0 & m & 0 & + & & & - & & = & & & +0 & FA Q \\ \hline 2. & -0 & = & & + & 0 & & - & 0 & = & - & 0 & -0 & OA. 0 \\ \hline 3. & -0 & = & 0 & * & & & - & & = & & & -0 & FA O \\ \hline \end{tabular} Answer is not complete