The following transactions were completed by Montague Inc., whose fiscal year is the calendar year: Year 1 Issued $2,070,000 of five-year, 11% callable bonds dated July 1, Year 1, at a market (effective) rate of 13%, receiving cash of July 1. $1,921,191. Interest is payable semiannually on December 31 and June 30. Borrowed $360,000 by issuing a 10-year, 6% installment note to Intexicon Bank. The note requires annual payments of $48,912, with Oct. 1. the first payment occurring on September 30, Year 2. Dec. 31. Accrued $5,400 of interest on the installment note. The interest is payable on the date of the next installment note payment Paid the semiannual interest on the bonds. The bond discount amortization of $14,881 is combined with the semiannual interest Dec. 31. payment. Year 2 Paid the semiannual interest on the bonds. The bond discount amortization of $14,881 is combined with the semiannual interest June 30. payment. . 30. Paid the annual payment on the note, which consisted of interest of $21,600 and principal of $27,312. Dec. 31. Accrued $4,990 of interest on the installment note. The interest is payable on the date of the next installment note payment. Paid the semiannual interest on the bonds. The bond discount amortization of $14,881 is combined with the semiannual interest Dec. 31. payment. Year 3 Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $89,285 after payment of June 30. 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 $19,961 and principal of $28,951. 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 Year 1 July 1 Oct. 1 Dec. 31-Note Dec. 31-Bond Year 2 June 30 Sept. 30 Dec. 31-Note Dec. 31-Bond Year 3 June 30 Sept. 30 2. Indicate the amount of the interest expense in (a) Year 1 and (b) Year 2. a. Year 1 $ b. Year 2 $ 3. Determine the carrying amount of the bonds as of December 31, Year 2