PR 14-4B Entries for bonds payable and installment note transactions The following transactions were completed by Montague Inc., whose fiscal year is the calendar year: Year 1 OBJ. 3, 4 July 1. Issued $55,000,000 of 10-year, 9% callable bonds dated July 1, Year 1, at a market (effective) rate of 7%, receiving cash of $62,817,040. Interest is payable semiannually on December 31 and June 30 Oct. 1, Borrowed $450,000 by issuing a six-year, 8% installment note to Intexicon Bank The note requires annual payments of $97,342, with the first payment occurring on September 30, Year 2 the date of the next installment note payment $390,852 is combined with the semiannual interest payment Dec. 31, Accrued $9,000 of interest on the installment noteTIe interest is payable on 31. Paid the semiannual interest on the bonds. The bond premium amortization of Year 2 June 30. Paid the semiannual interest on the bonds. The bond premium amortization of Sept. 30. Paid the annual payment on the note, which consisted of interest of $36,000 Dec. 31. Accrued $7,773 of interest on the installment note. The interest is payable on $390,852 is combined with the semiannual interest payment. and principal of $61,342 the date of the next installment note payment. $390,852 is combined with the semiannual interest payment. 31. Paid the semiannual interest on the bonds. The bond premium amortization of Year 3 June 30. Recorded the redemption of the bonds, which were called at 103. The balance in the bond premium account is $6,253,632 after payment of interest and amor tization of premium have been recorded. Record the redemption only Sept. 30. Paid the second annual payment on the note, which consisted of interest of $31,093 and principal of $66,249 Instructions 1. Journalize the entries to record the foregoing transactions 2. Indicate the amount of the interest expense in (a) Year 1 and (b) Year 2 3. Determine the carrying amount of the bonds as of December 31, Year 2