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The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year: Year 1 July 1. Issued $2,780,000 of five-year, 6% Callable
The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year: Year 1 July 1. Issued $2,780,000 of five-year, 6% Callable bonds dated July 1, Year 1, at a market (effective) rate of 7%, receiving cash of $2,664,400. Interest is payable semiannually on December 31 and June 30. Dec. 31. Paid the semiannual interest on the bonds. The bond discount amortization of $11,560 is combined with the semiannual interest payment. Dec. 31. Closed the interest expense account. Year 2 June 30. Paid the semiannual interest on the bonds. The bond discount amortization of $11,560 is combined with the semiannual interest payment. Dec. 31. Paid the semiannual interest on the bonds. The bond discount amortization of $11,560 is combined with the semiannual interest payment Dec. 31. Closed the interest expense account Year 3 June 30. Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account $69,360 after payment of interest and amortization of discount have been recorded. (Record the redemption only) Year 1 July 1 Dec. 31-Bond Dec. 31-Closing Year 2 June 30 : Dec. 31-Bond Dec. 31-Closing Year 3 June 30 2. Indicate the amount of the interest expense in (a) Year 1 and (b) Year 2. a. Year 15 b. Year 2 3. Determine the carrying amount of the bonds as of December 31, Year 2
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