Entries for Bonds Payable and installment Note Transactions The following transactions were completed by Winklevoss inc., whose fiscal year is the calendar year: Year 1 July 1. Issued $1,490,000 of five-year, 7% callable bonds dated July 1, Year 1, at a market (effective) rate of 9%, receiving cash of $1,372,100. Interest is payable semiannually on December 31 and June 30 . Oct. 1. Borrowed $200,000 by issuing a 10-year, 6% installment note to Nicks Bank. The note requires annual payments of $27,174, with the first payment occurring on September 30, Year 2 . Dec. 31. Accrued $3,000 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 discount amortization of $11,790 is combined with the semiannual interest payment. Year 2 June 30. Paid the semannual interest on the bonds. The bond discount amortization of $11,790 is combined with the semiannual interest payinent. Sept. 30. Paid the annual pavment on the note, which consisted of interest of $12,000 and principal of $15,174. Dec. 31. Accrued $2,772 of interest on the installment note. The interest is payable on the date of the next installinent note payment. 31. Paid the semiannual interest on the bonds. The bond discount amortiztion of 511,790 is combined with the semaannual interest payment. June 30. Recorded the redemption of the bonds, which were called at 98 . The balance in the bond discount account is 570,740 after payment of interest and amortization of discount have been recorded. Record the redemption only. Sept. 30. Paid the second annual payment on the note, which consisted of interest of $11,090 and principal of $16,084. 2. Indicate the amount of the interest expense in (a) Year 1 and (b) Year 2. a. Year 1$ b. Year 21 3. Determine the carrying amount of the bonds as of December 31 , Year 2