3. $61,644,484 Excel General Ledger Show Me How Chapter 14 Long-Term Liabilities: Bonds and Notes 715 PR 14-4B Entries for bonds payable and installment note transactions The following transactions were completed by Montague Inc., whose fiscal year is the . 3, 4 calendar year. Year 1 July 1. Issued $55,000,000 of 10-year, 9% callable bonds dated July 1, Year 1, at a market (effective) rate of 7%, receiving cash of $62,817,040. Interest is payable semiannually on December 31 and June 30. Oct. 1. Borrowed $450,000 by issuing a six-year, 8% installment note to Intexicon Bank. The note requires annual payments of $97,342, with the first payment occurring on September 30, Year 2. Dec. 31. Accrued $9,000 of interest on the installment note. The interest is payable on the date of the next installment note payment. 31. Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest payment. Year 2 June 30. Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest payment. Sept. 30. Paid the annual payment on the note, which consisted of interest of $36,000 and principal of $61,342. Dec. 31. Accrued $7.773 of interest on the installment note. The interest is payable on the date of the next installment note payment. 31. Paid the semiannual interest on the bonds. The bond premium amortization of $390,852 is combined with the semiannual interest payment, Year 3 June 30. Recorded the redemption of the bonds, which were called at 103. The balance in the bond premium account is $6,253,632 after payment of interest and amor- tization of premium have been recorded. Record the redemption only. Sept. 30. Paid the second annual payment on the note, which consisted of interest of $31,093 and principal of $66,249. Instructions 1. Journalize the entries to record the foregoing transactions, 2. Indicate the amount of the interest expense in (a) Year 1 and (b) Year 2 3. Determine the carrying amount of the bonds as of December 31, Year 2. AutoSave PR 14 48 LP - Saved - Laura M Pike M ca File Home Insert Share Comments Page Layout Formulas Data -10 % A A Alignment Number Review View Help clomoto Anal BI DUNI Cells Editing Clipboard Font Sys Analysis Sertivity 122 B D E H 13 M Year 1 July 1 Cash Bonds Payable Promium on Bonds Payable Enter the larger of the credits 0 first 55,000,000 Oct 1 Cash Notes Payable doo 450,000 Dec. 31 Interest Expense Interest Payable 9,000 9,000 31 Enter the larger of the debts frst 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 30 Interest Expense Premium on Bonds Payable Cash 52 Year 2 June 30 Enter the larger of the debits first. Interest Expense Premium on Bonds Payable Cash Sept. 30 Enter debits in descending order by amount Notes Payable Interest Expense Interest Payable Cash Den 34 aran Pr. 14-48 100% Type here to search O 99 AutoSave OF PR 14-4B LP - Saved - Laura M Pike LM File Home Insert 3 Share Comments Arial 1 Page Layout Formulas Data Review View Help 10 % Conditional formatting A A Blomst ble Alignment Number Coll Style Cells Editing Analysen Clipboard Foot Styles Analysis Sensitive 122 B C D E F G Dec 31 38 39 40 41 42 43 Interest Expense Interest Payable 31 Enter debits in descending order by amount Interest Expense Premium on Bonds Payable Cash 44 45 46 47 48 49 Year 3 June 30 Enter the larger of the debits first Enter the larger of the credits first. Bonds Payable Premium on Bonds Payablo Cash Gain on Redemption of Bonds Enter debits in descending order by amount Sept 30 Notes Payable Interest Expense Interest Payable Cash 50 51 52 53 54 55 58 57 58 59 60 61 62 63 RE Year 1 interest expense b. Year 2 interest expense Pr. 14-4B AutoSave ONE PR 14-48 LP - Saved Laura M Pike 1 File Home Insert Page Layout Formulas Data 3 Share Comm X Review View Help Conditional Formatting Arial 10 A A A Alignment Number Ceils Editing Clipboard 2 Font Styles Analysis Sensity 122 f B G H June 30 M D F Bonds Payable Premium on Bonds Payable Cash Gain on Redemption of Bonds 47 48 49 50 51 52 53 Enter the larger of the credits first Enter debits in descending order by amount Sept 30 Notes Payable Interest Expense Interest Payable Cash 54 55 58 57 58 59 Year 1 interest expense b. Year 2 interest expense 60 61 62 83 64 65 66 67 68 89 70 71 72 Initial carrying amount of bonds Premium amortized on December 31, Year 1 Premium amortized on June 30, Year 2 Promium amortized on December 31, Year 2 Carrying amount of bonds, December 31, Year 2