Solve for financial statement only Exercise 10-15A (Algo) Straight-line amortization of a bond premium LO 10-5The Square Foot Grill, Incorporated issued $240,000 of 10-year, 7 percent bonds on January 1, Year 2, at 102. Interest is payable incash annually on December 31. The straight-line method is used for amortization.Requireda. 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 financialstatements.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 AUse a financial statements model to demonstrate how (1) the January 1, Year 2, bond issue and (2) the December 31, Year 2, recognition ofinterest expense, including the amortization of the premium and the cash payment, affects the company's financial statements.Note: Use + for increase or for decrease. In the Statement of Cash Flows column, use the initials OA to designate operating activity, IA forinvesting activity, and FA for financing activity. Not all cells require input.EventNumberReq B to E1.2.SQUARE FOOT GRILL, INCORPORATEDEffect of Transactions on Financial StatementsIncome StatementBalance SheetStockholders'Equity= Liabilities +AssetsRevenue<Req AExpenseNetIncomeStatement ofCash FlowsReq B to E>25 of 33#NextShow less A

Premium on Bonds Payable=Issue price of Bonds Payable-Face value of Bonds Payable Annual…

Exercise 10-15A (Algo) Straight-line amortization of a bond premium LO 10-5 The Square Foot Grill, Incorporated issued $240,000 of 10-year, 7 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.