question 1

question 2

Diaz Company issued bonds with a face value of $92,000 on January 1, Year 1. The bonds had a stated interest rate of 5 percent and a 10-year term. Interest is paid in cash annually, beginning Decernber 31, Year 1 . The bonds were issued at 98 . The straight-line method is used for amortization. Required a. Use a financial statements model to demonstrate how (1) the January 1, Yoar 1, bond issue and (2) the December 31, Year 1. recognition of interest expense, including the amortization of the discount and the cash payment, offect the company's financial statements. 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. The Square Foot Grill, Incorporated issued $300,000 of 10 -year, 8 percent bonds on July 1, Year 1, at 103. Interest is payable in cash semiannually on June 30 and December 31. The straight-line method is used for amortization. Required a. Prepare the journal entries to record issuing the bonds and any necessary journal entries for Year 1 and Year 2. Post the journal entries to T-accounts. Prepare any necessary closing entries for Year 1