The Square Foot Grill, Inc. issued $248,000 of 10-year, 5 percent bonds on January 1. Year 2, at 102. Interest is payable in cash annually on December 31. The straight-line method is used for amortization Required a. Use a financial statements model to demonstrate how (1) the January 1, Year 2, bond issue and (2) the December 31, Year 2 recognition of interest expense, including the amortization of the premium and the cash payment, affects 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 2. c. Determine the amount of interest expense reported on the Year 2 income statement. d. Determine the carrying value of the bond liability as of December 31, Year 3. e. Determine the amount of interest expense reported on the Year 3 income statement Complete this question by entering your answers in the tabs below. Req A Req B to E Use a financial statements model to demonstrate how (1) the January 1, Year 2, bond issue and (2) the December 31, Year 2, recognition of interest expense, including the amortization of the premium and the cash payment, affects 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, 1A for investing activity, and FA for financing activity. Not all cells require input.) Show less SQUARE FOOT GRILL, INC Effect of Transactions on Financial Statements Balance Sheet Income Statement Liabilities - Stockholders Revenue Equity Expense Event No. Statement of Cash Flows Assets Net Income 1 2 The Square Foot Grill, Inc. issued $248,000 of 10-year, 5 percent bonds on January 1, Year 2, at 102. Interest is payable in cash annually on December 31. The straight-line method is used for amortization Required a. Use a financial statements model to demonstrate how (1) the January 1, Year 2, bond issue and (2) the December 31. Year 2. recognition of interest expense, including the amortization of the premium and the cash payment, affects the company's financial b. Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, Year 2. c. Determine the amount of interest expense reported on the Year 2 income statement. d. Determine the carrying value of the bond liability as of December 31, Year 3 e. Determine the amount of interest expense reported on the Year 3 income statement statements Complete this question by entering your answers in the tabs below. Reg A Reg B to ) Determine the carrying value (face value less discount or plus premium) of the bond liability as of December 31, Year 2 Determine the amount of interest expense reported on the Year 2 income statement. Determine the carrying value of the bond liability as of December 31, Year 3. Determine the amount of interest expense reported on the Year 3 income statement. Show less b C Carrying value Interest expenso Carrying value Interest expense d.
