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 $1,860,000 of five-year, 7% callable bonds dated July 1, Year 1, at a market (effective) rate of 8%, receiving cash of $1,784,568. Interest is payable semiannually on December 31 and June 30.
   Oct. 1.	Borrowed $430,000 by issuing a 10-year, 6% installment note to Nicks 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.
   31.	Paid the semiannual interest on the bonds. The bond discount amortization of $7,543 is combined with the semiannual interest payment.
   Year 2
   June 30.	Paid the semiannual interest on the bonds. The bond discount amortization of $7,543 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.
   31.	Paid the semiannual interest on the bonds. The bond discount amortization of $7,543 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 $45,260 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:

   Round all amounts to the nearest dollar.

   a) 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

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

   a. Year 1 b. Year 2

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