Entries for bonds payable and installment note transactions Inatructions Chart of Accounts IJournal I Final Questons Instructions The folowing transacfions were completed by Winklevoss lnc., whose fiscal year is the celendsr year: Year 1 July Issued \$58,800,000 of 20-yoar, 11% callable bonds dated July 1, Yoar 1, at a market (ellective) rate of 13\%, fecelving cash of 550,482,396. Interest is payable semiannualy on December 31 and. June 30 . Oct. 1 Borrowed $320,000 by issuing a six.year, 5% instglment note to Nicks Bank. The note requires annual perments of S63.046, with the firs pmyment occuring on Seplember 30 , Vear 2 Dec. 31 Accrutd \$4,000 of interest on the installment note. The interest is payable on the date of the next instalmert note parment. 31 Paid the semiamual interest on the bonds. The bond discount amortization of $207,940 is combined with the semiancual interest payment Year 2 dune 30 Paid the semiannual imerest on the bonds. The bond discount amoritation of 5707,940 is combined wh the senianual interest parment Sept. 30 Pald the annual payment on the note, Whikh consinted of interest of $16,000 and principal of $47,046. Dec: 31 Accrued 53,412 of interes on the instatment note. The interest is payable on the date of the next installment note payment. 31 Paid the semiannual inferest on the bonds. The bend biscount amortizatien of $207,940 is combined wht the semiannual interest poyment. Vear 3 Chedk iny Work Previous Next Entries for bonds payable and installment note transactions Instructions June 30 Paid the semiannual interest on the bonds. The bond discount amortization of $207,940 is combined with the semiannual interest payment. Sept. 30 Paid the annual payment on the note, which consisted of interest of $16,000 and principal of $47,046. Dec. 31 Accrued $3,412 of interest on the instalment note. The interest is payablo on the date of the next installment note payment. 31 Paid the semiannual interest on the bonds. The bond discount amortization of $207.940 is combined with the semiannual interest payment. Year 3 June 30 Recorded the redemption of the bonds, which were called at 98 . The balance in the bond discount account is $7,485,844 afer payment of interest and amortization of discount have been recorded. Fecord the redemption only. Sept. 30 Paid the second annual payment on the note, which conslated of interest of $13,648 and prinopal of $49.398. Pequlred: 1. Journalize the entries to record the foregoing transactions. Aefer fo the chart of accounts for the exact wording of the account titles. CNOW joumals do not use ines for joumal explanations. Every line on a joumal page is used for debil or credit entries. CNOW joumals will automaticaly indent a credt enty when a credit amount is entered. Round all amounts to the nearest dollar. 2. Indicate the amount of the interest expense in (a) Year 1 and (b) Yoar 2. 3. Determine the carrying amount of the bonds as of December 31 , Vear 2. Entries for bonds payable and installment note transactions Entries for bonds payable and instaltment note transactions Instructions Chart of Aceounts Entries for bonds payable and installment note transactions Instructoons Chart of Accounts Journal Final Custlons. 2 Indicate the amount of the interest expense in (a) Year 1 and (b) Year 2. a. Year 1: b. Year 2 . 3. Determine the carming amount of the bonds as of December 31, Year 2
