Entries for Bonds Payable and Installment Note Transactions

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

2014
July 1.	Issued $5,760,000 of five-year, 10% callable bonds dated July 1, 2014, at a market (effective) rate of 12%, receiving cash of $5,336,059. Interest is payable semiannually on December 31 and June 30.
Oct. 1.	Borrowed $170,000 as a 10-year, 8% installment note from Marble Bank. The note requires annual payments of $25,335, with the first payment occurring on September 30, 2015.
Dec. 31.	Accrued $3,400 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 is amortized annually in a separate journal entry.
Dec. 31.	Recorded bond discount amortization of $42,394, which was determined using the straight-line method.
Dec. 31.	Closed the interest expense account.
2015
June 30.	Paid the semiannual interest on the bonds.
Sept. 30.	Paid the annual payment on the note, which consisted of interest of $13,600 and principal of $11,735.
Dec. 31.	Accrued $3,165 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 is amortized annually in a separate journal entry.
Dec. 31.	Recorded bond discount amortization of $84,788, which was determined using the straight-line method.
Dec. 31.	Closed the interest expense account.
2016
June 30.	Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $254,365 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 $12,661 and principal of $12,674.

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
2014
July 1	SelectBonds payableCashGain on bonds payableInterest expenseInterest payableNotes payableItem 1
	SelectBonds payableDiscount on bonds payableInterest expenseInterest payableLoss on bonds payablePremium on bonds payableItem 4
	SelectBonds payableCashDiscount on bonds payableInterest expenseIncome summaryPremium on bonds payableItem 7
Oct. 1	SelectBonds payableCashDiscount on bonds payableInterest expenseInterest payableNotes payableItem 10
	SelectBonds payableCashDiscount on bonds payableInterest expenseInterest payableNotes payableItem 12
Dec. 31-Note	SelectBonds payableCashDiscount on bonds payableInterest expenseInterest payableNotes payableItem 14
	SelectBonds payableCashDiscount on bonds payableInterest expenseInterest payableNotes payableItem 16
Dec. 31-Bond	SelectBonds payableCashIncome summaryInterest expenseInterest payableNotes payableItem 18
	SelectBonds payableCashGain on bonds payableInterest expenseInterest payableNotes payableItem 20
Dec. 31-Amort.	SelectBonds payableCashDiscount on bonds payableIncome summaryInterest expenseInterest payableItem 22
	SelectBonds payableCashDiscount on bonds payableInterest expenseInterest payableLoss on bonds payableItem 24
Dec. 31-Closing	SelectBonds payableCashDiscount on bonds payableIncome summaryInterest expenseNotes payableItem 26
	SelectBonds payableCashDiscount on bonds payableIncome summaryInterest expenseInterest payableItem 28
2015
June 30	SelectBonds payableCashDiscount on bonds payableInterest expenseInterest payableNotes payableItem 30
	SelectBonds payableCashDiscount on bonds payableInterest expenseInterest payableNotes payableItem 32
Sept. 30	SelectAccounts payableBonds payableCashDiscount on bonds payableIncome summaryInterest expenseItem 34
	SelectAccounts payableBonds payableCashIncome summaryInterest payableLoss on bonds payableItem 37
	SelectAccounts payableBonds payableCashDiscount on bonds payableGain on bonds payableNotes payableItem 40
	SelectAccounts payableBonds payableCashInterest expenseInterest payableNotes payableItem 43
Dec. 31-Note	SelectAccounts payableCashDiscount on bonds payableInterest expenseInterest payableNotes payableItem 46
	SelectAccounts payableCashDiscount on bonds payableInterest expenseInterest payableNotes payableItem 48
Dec. 31-Bond	SelectBonds payableCashInterest expenseInterest payableLoss on bonds payableNotes payableItem 50
	SelectAccounts payableBonds payableCashGain on bonds payableInterest expenseInterest payableItem 52
Dec. 31-Amort.	SelectBonds payableCashDiscount on bonds payableInterest expenseInterest payableLoss on bonds payableItem 54
	SelectBonds payableCashDiscount on bonds payableGain on bonds payableInterest expenseInterest payableItem 56
Dec. 31-Closing	SelectCashDiscount on bonds payableIncome summaryInterest expenseInterest payableNotes payableItem 58
	SelectCashBonds payableDiscount on bonds payableIncome summaryInterest expenseInterest payableItem 60
2016
June 30	SelectBonds payableCashGain on redemption of bondsInterest expenseInterest receivableNotes payableItem 62
	SelectCashDiscount on bonds payableInterest expenseInterest payableLoss on redemption of bondsNotes payableItem 65
	SelectBonds payableDiscount on bonds payableGain on redemption of bondsInterest expenseInterest payableInterest revenueItem 68
	SelectBonds payableCashGain on redemption of bondsInterest expenseInterest payableNotes payableItem 71
Sept. 30	SelectAccounts payableBonds payableCashGain on bonds payableIncome summaryInterest expenseItem 74
	SelectAccounts payableBonds payableCashDiscount on bonds payableInterest payableLoss on bonds payableItem 77
	SelectAccounts payableBonds payableCashDiscount on bonds payableLoss on redemption of bondsNotes payableItem 80
	SelectBonds payableCashDiscount on bonds payableInterest expenseInterest payableNotes payableItem 83

2. Indicate the amount of the interest expense in (a) 2014 and (b) 2015.

a. 2014 $ b. 2015 $

3. Determine the carrying amount of the bonds as of December 31, 2015. $