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

  1. ntries 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 $2,870,000 of five-year, 9% callable bonds dated July 1, Year 1, at a market (effective) rate of 11%, receiving cash of $2,653,669. 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 $21,633 is combined with the semiannual interest payment.
    Year 2
    June 30. Paid the semiannual interest on the bonds. The bond discount amortization of $21,633 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 $21,633 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 $129,799 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.

    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 fill in the blank 2 fill in the blank 3
    fill in the blank 5 fill in the blank 6
    fill in the blank 8 fill in the blank 9
    Oct. 1 fill in the blank 11 fill in the blank 12
    fill in the blank 14 fill in the blank 15
    Dec. 31-Note fill in the blank 17 fill in the blank 18
    fill in the blank 20 fill in the blank 21
    Dec. 31-Bond fill in the blank 23 fill in the blank 24
    fill in the blank 26 fill in the blank 27
    fill in the blank 29 fill in the blank 30
    Year 2
    June 30 fill in the blank 32 fill in the blank 33
    fill in the blank 35 fill in the blank 36
    fill in the blank 38 fill in the blank 39
    Sept. 30 fill in the blank 41 fill in the blank 42
    fill in the blank 44 fill in the blank 45
    fill in the blank 47 fill in the blank 48
    fill in the blank 50 fill in the blank 51
    Dec. 31-Note fill in the blank 53 fill in the blank 54
    fill in the blank 56 fill in the blank 57
    Dec. 31-Bond fill in the blank 59 fill in the blank 60
    fill in the blank 62 fill in the blank 63
    fill in the blank 65 fill in the blank 66
    Year 3
    June 30 fill in the blank 68 fill in the blank 69
    fill in the blank 71 fill in the blank 72
    fill in the blank 74 fill in the blank 75
    fill in the blank 77 fill in the blank 78
    Sept. 30 fill in the blank 80 fill in the blank 81
    fill in the blank 83 fill in the blank 84
    fill in the blank 86 fill in the blank 87
    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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