On January 1, 2021, Waterway Ltd. issued bonds with a maturity value of $4.95 million for $4,738,635, when the market rate of interest was 6%. The bonds have a contractual interest rate of 5% and mature on January 1, 2026. Interest on the bonds is payable semi-annually on July 1 and January 1 of each year. On January 1, 2021, Sandhill Company, a public company, purchased Waterway Ltd. bonds with a maturity value of $0.99 million to earn interest. On December 31, 2021, the bonds were trading at 97. Both companies year end is December 31.

Prepare the journal entries for Waterway Ltd. to record: (1) The payment of interest on July 1, 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)

July. 1

Interest expense Bonds Payable Cash

(2) The accrual of interest expense on December 31, 2021. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)

Dec 31 Interest expense Bonds Payable Interest Payable

(3) The payment of interest on January 1, 2022. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.)