Entries for Bonds Payable and Installment Note Transactions The following transactions were completed by Montague Inc , whose fiscal year is the calendar year Year 1 July 1 Issued $5,340,000 of five year, 7 callable bonds dated July 1, Year 1, at a market (effective) rate of 8 , receiving cash of $5,123,440 Interest is payable semiannually on December 31 and June 30 Oct 1 Borrowed $430,000 by issuing a 10 year, 6 installment note to Intexicon Bank The note requires annual payments of $58,423, with the first payment occurring on September 30, Year 2 Dec 31 Accrued $6,450 of interest on the installment note The interest is payable on the date of the next installment note payment Dec 31 Paid the semiannual interest on the bonds The bond discount amortization of $21,656 is combined with the semiannual interest payment Year 2 June 30 Paid the semiannual interest on the bonds The bond discount amortization of $21,656 is combined with the semiannual interest payment Sept 30 Paid the annual payment on the note, which consisted of interest of $25,800 and principal of $32,623 Dec 31 Accrued $5,961 of interest on the installment note The interest is payable on the date of the next installment note payment Dec 31 Paid the semiannual interest on the bonds The bond discount amortization of $21,656 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 $129,936 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 $23,843 and principal of $34,580 Required 1 Journalize the entries to record the foregoing transactions For compound transactions, if an amount box does not require an entry, leave it blank or enter 0 When required, round your answers to the nearest dollar Date Account Debit Credit Year 1 July 1 Oct 1 Dec 31 Note Dec 31 Bond Year 2 June 30 Sept 30 Dec 31 Note Dec 31 Bond Year 3 June 30 Sept 30 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 $

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Entries for Bonds Payable and Installment Note Transactions The following transactions were completed by Montague Inc., whose fiscal year is the calendar year: Year 1

Entries for Bonds Payable and Installment Note Transactions

The following transactions were completed by Montague Inc., whose fiscal year is the calendar year:

Year 1
July 1.	Issued $5,340,000 of five-year, 7% callable bonds dated July 1, Year 1, at a market (effective) rate of 8%, receiving cash of $5,123,440. Interest is payable semiannually on December 31 and June 30.
Oct. 1.	Borrowed $430,000 by issuing a 10-year, 6% installment note to Intexicon Bank. The note requires annual payments of $58,423, with the first payment occurring on September 30, Year 2.
Dec. 31.	Accrued $6,450 of interest on the installment note. The interest is payable on the date of the next installment note payment.
Dec. 31.	Paid the semiannual interest on the bonds. The bond discount amortization of $21,656 is combined with the semiannual interest payment.
Year 2
June 30.	Paid the semiannual interest on the bonds. The bond discount amortization of $21,656 is combined with the semiannual interest payment.
Sept. 30.	Paid the annual payment on the note, which consisted of interest of $25,800 and principal of $32,623.
Dec. 31.	Accrued $5,961 of interest on the installment note. The interest is payable on the date of the next installment note payment.
Dec. 31.	Paid the semiannual interest on the bonds. The bond discount amortization of $21,656 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 $129,936 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 $23,843 and principal of $34,580.

Required:

1. Journalize the entries to record the foregoing transactions. For compound transactions, if an amount box does not require an entry, leave it blank or enter "0". When required, round your answers to the nearest dollar.