Kornet Co. produces and sells graphite for golf clubs. The following transactions were completed by Kornet Co., whose fiscal year is the calendar year:

{Instructions}
1. Journalize the entries to record the foregoing transactions.
2. Indicate the amount of the interest expense in

(a) 2007 and

(b) 2008.
3. Determine the carrying amount of the bonds as of December 31, 2008.objs. 2, 3

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2007 July 1. Issued $19,000,000 of seven-year, 12% callable bonds dated July 1, 2007, at an effective rate of 10%, receiving cash of $20,880,780. Interest is payable semi- annually on December 31 and June 30. Dec. 31. Paid the semiannual interest on the bonds. 2008 31. Recorded bond premium amortization of $134,341, which was determined by using the straight-line method. 31. Closed the interest expense account. June 30. Paid the semiannual interest on the bonds. Dec. 31. Paid the semiannual interest on the bonds. Dec. 31. Recorded bond premium amortization of $268,682, which was determined by using the straight-line method. 2009 31. Closed the interest expense account. July 1. Recorded the redemption of the bonds, which were called at 101.5. The balance in the bond premium account is $1,343,416 after the payment of interest and amortization of premium have been recorded. (Record the redemption only.)