On January 1, 2021, Splash City issues $370,000 of 6% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year. The market interest rate on the issue date is 7% and the bonds issued at $330,493.

Required: 1. Using an amortization schedule, show that the bonds have a carrying value of $332,463 on December 31, 2022. (Round Interest expense to nearest whole dollar.)

If the market interest rate drops to 6% on December 31, 2022, it will cost $370,000 to retire the bonds. Record the retirement of the bonds on December 31, 2022.

Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value $ 330,493 01/01/2021 06/30/2021 12/31/2021 06/30/2022 12/31/2022 Record the retirement of the bonds. Note: Enter debits before credits. Date General Journal Debit Credit December 31, 2022