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 $4,650,000 of five-year, 8% callable bonds dated July 1, Year 1, at a market (effective) rate of 10%, receiving cash of $4,290,940. Interest is payable semiannually on December 31 and June 30. Oct. 1. Borrowed $290,000 by issuing a 10-year, 7% installment note to Nicks Bank. The note requires annual payments of $41,289, with the first payment occurring on September 30, Year 2. Dec. 31. Accrued $5,075 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 $35,906 is combined with the semiannual interest Year 2 payment. June 30, Paid the semiannual interest on the bonds. The bond discount amortization of $35,906 is combined with the semiannual Interest payment, Sept. 30. Paid the annual payment on the note, which consisted of interest of $20,300 and principal of $20,909 Dec. 31. Accrued $4,700 of interest on the installment note. The interest is payable on the date of the next instaliment note payment. 31. Paid the semiannual interest on the bonds. The bond discount amortization of $35,906 is combined with the semiannual interest Year 3 payment. June 30. Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $215,436 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 $18,831 and principal of $22.458, Required: Round all amounts to the nearest dollar. 1. Journalize the entries to record the foregoing transactions. If an amount box does not require an entry, leave it blank. Check My Work Round all amounts to the nearest dollar. 1. Journalize the entries to record the foregoing transactions. If an amount box does not require an entry, leave it blank. Date Year 1 July 1 Cash Oct. 1 Account Discount on Bonds Payable Bonds Payable Cash Notes Payable Dec. 31-Note Interest Expense Interest Payable Dec. 31-Bond Interest Expense Discount on Bonds Payable Cash I Year 2 June 30 Interest Expense Discount on Bonds Payable Cash Debit 11 11 111 111 Credit 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 carrying amount of the bonds as of December 31, Year 2. Feedback Sept. 30 Interest Expense Interest Payable Notes Payable Cash Dec. 31-Note: Interest Expense Interest Payable I Dec. 31-Bond Interest Expense Year 3 June 30 Discount on Bonds Payable Cash Bonds Payable Loss on Redemption of Bonds Discount on Bonds Payable Cash Sept. 30 Interest Expense Interest Payable Notes Payable Cash 1111 1111 111 1311