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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

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 $8,200,000 of five-year, 8% callable bonds dated July 1, Year 1, at a market (effective) rate of 10%, receiving cash of $7,566,819. Interest is payable semiannually on December 31 and June 30.
Oct. 1. Borrowed $360,000 by issuing a 10-year, 6% installment note to Nicks Bank. The note requires annual payments of $48,912, with the first payment occurring on September 30, Year 2.
Dec. 31. Accrued $5,400 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 $63,318 is combined with the semiannual interest payment.
Year 2
June 30. Paid the semiannual interest on the bonds. The bond discount amortization of $63,318 is combined with the semiannual interest payment.
Sept. 30. Paid the annual payment on the note, which consisted of interest of $21,600 and principal of $27,312.
Dec. 31. Accrued $4,990 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 $63,318 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 $379,909 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 $19,961 and principal of $28,951.

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.

Date Account Debit Credit
Year 1
July 1

Bonds PayableCashGain on Bonds PayableInterest ExpenseInterest Payable

fill in the blank 2 fill in the blank 3

Bonds PayableDiscount on Bonds PayableInterest ExpenseLoss on Bonds PayablePremium on Bonds Payable

fill in the blank 5 fill in the blank 6

Bonds PayableCashDiscount on Bonds PayableInterest ExpensePremium on Bonds Payable

fill in the blank 8 fill in the blank 9
Oct. 1

Bonds PayableCashInterest ExpenseInterest PayableNotes Payable

fill in the blank 11 fill in the blank 12

Bonds PayableCashInterest ExpenseInterest PayableNotes Payable

fill in the blank 14 fill in the blank 15
Dec. 31-Note

Bonds PayableCashInterest ExpenseInterest PayableNotes Payable

fill in the blank 17 fill in the blank 18

Bonds PayableCashInterest ExpenseInterest PayableNotes Payable

fill in the blank 20 fill in the blank 21
Dec. 31-Bond

Bonds PayableCashInterest ExpenseInterest PayableNotes Payable

fill in the blank 23 fill in the blank 24

Accounts PayableBonds PayableDiscount on Bonds PayableInterest ExpenseInterest Payable

fill in the blank 26 fill in the blank 27

Bonds PayableCashInterest ExpenseInterest PayableNotes Payable

fill in the blank 29 fill in the blank 30
Year 2
June 30

CashDiscount on Bonds PayableInterest ExpenseInterest PayableNotes Payable

fill in the blank 32 fill in the blank 33

Accounts PayableBonds PayableDiscount on Bonds PayableInterest ExpenseInterest Payable

fill in the blank 35 fill in the blank 36

Bonds PayableCashInterest ExpenseInterest PayableInterest revenue

fill in the blank 38 fill in the blank 39
Sept. 30

Accounts PayableBonds PayableCashDiscount on Bonds PayableInterest Expense

fill in the blank 41 fill in the blank 42

Accounts PayableBonds PayableCashInterest PayableLoss on Bonds Payable

fill in the blank 44 fill in the blank 45

Bonds PayableCashDiscount on Bonds PayableGain on Bonds PayableNotes Payable

fill in the blank 47 fill in the blank 48

Bonds PayableCashInterest ExpenseInterest PayableNotes Payable

fill in the blank 50 fill in the blank 51
Dec. 31-Note

CashDiscount on Bonds PayableInterest ExpenseInterest PayableNotes Payable

fill in the blank 53 fill in the blank 54

CashDiscount on Bonds PayableInterest ExpenseInterest PayableNotes Payable

fill in the blank 56 fill in the blank 57
Dec. 31-Bond

Discount on Bonds PayableInterest ExpenseInterest PayableLoss on Bonds PayableNotes Payable

fill in the blank 59 fill in the blank 60

Accounts PayableBonds PayableDiscount on Bonds PayableInterest ExpenseInterest Payable

fill in the blank 62 fill in the blank 63

Bonds PayableCashGain on Bonds PayableInterest ExpenseInterest Payable

fill in the blank 65 fill in the blank 66
Year 3
June 30

Bonds PayableCashGain on Redemption of BondsInterest ExpenseNotes Payable

fill in the blank 68 fill in the blank 69

CashDiscount on Bonds PayableInterest ExpenseLoss on Redemption of BondsNotes Payable

fill in the blank 71 fill in the blank 72

Bonds PayableDiscount on Bonds PayableGain on Redemption of BondsInterest ExpenseInterest Revenue

fill in the blank 74 fill in the blank 75

Bonds PayableCashGain on Redemption of BondsInterest ExpenseNotes Payable

fill in the blank 77 fill in the blank 78
Sept. 30

Accounts PayableBonds PayableCashGain on Bonds PayableInterest Expense

fill in the blank 80 fill in the blank 81

Bonds PayableCashDiscount on Bonds PayableInterest PayableLoss on Bonds Payable

fill in the blank 83 fill in the blank 84

Bonds PayableCashDiscount on Bonds PayableLoss on Redemption of BondsNotes Payable

fill in the blank 86 fill in the blank 87

CashDiscount on Bonds PayableInterest ExpenseInterest PayableNotes Payable

fill in the blank 89 fill in the blank 90

2. Indicate the amount of the interest expense in (a) Year 1 and (b) Year 2.

a. Year 1 $fill in the blank 91 b. Year 2 $fill in the blank 92

3. Determine the carrying amount of the bonds as of December 31, Year 2. $fill in the blank 93

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