The following transactions were completed by Winklevoss Inc, whose fiscal year is the calendar year Year 1 July Oct. 1 Issued $76,600,000 of 20-year, 8% callable bonds dated July 1, Year 1, at a market (effective) rate of 1 Dec 31 31 9%, receiving cash of $69,552,279 Interest is payable semiannually on December 31 and June 30 Borrowed $220,000 by issuing a six-year, 7% instalment note to Nicks Bank The note requires annual payments of $46,155, with the first payment occurring on September 30, Year 2 Accrued $3,850 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 $176,193 is combined with the semiannual interest payment Year 2 June 30 30 35 Sept Dec 31 Paid the semiannual interest on the bonds. The bond discount amortization of $176,193 is combined with the semiannual interest payment Paid the annual payment on the note, which consisted of interest of $15.400 and principal of $30,755 Accrued $3,312 of interest on the installment note. The interest is payable on the date of the next installment nonument Instructions Dec 31 31 Accrued $3,312 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 $176,193 is combined with the semiannual interest payment Year 3 June 30 Sept 30 Recorded the redemption of the bonds, which were called at 98 The balance in the bond discount account is $6,342,949 after payment of interest and amortization of discount have been recorded Record the redemption only Paid the second annual payment on the note, which consisted of interest of $13,247 and principal of $32,908 Required: 1 Journalize the entries to record the foregoing transactions. Refer to the chart of accounts for the exact wording of the account tities CNOW journals do not use lines for journal explanations. Every une on a journal page is used for debit or credit entries CNOW journals will automatically indent a credit entry when a credit amount is entered Round all amounts to the nearest dollar. 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 Chart of Accounts Winklevoss Inc. General Ledger ASSETS 110 Cash 111 Petty Cash 121 Accounts Receivable 122 Allowance for Doubtful Accounts 126 Interest Receivable 127 Notes Receivable 131 Merchandise Inventory 141 Office Supplies 142 Store Supplies 151 Prepaid Insurance 191 Land 192 Store Equipment 193 Accumulated Depreciation Store Fouinment REVENUE 410 Sales 610 Interest Revenue 611 Gain on Redemption of Bonds EXPENSES 510 Cost of Merchandise Sold 515 Credit Card Expense 516 Cash Short and Over 521 Sales Salaries Expense 522 Office Salaries Expense 531 Advertising Expense 532 Delivery Expense 533 Repairs Expense Chart of Accounts Toy Conta 192 Store Equipment 532 Delivery Expense 193 Accumulated Depreciation-Store Equipment 533 Repairs Expense 194 Office Equipment 195 Accumulated Depreciation Office Equipment LIABILITIES 210 Accounts Payable 221 Salaries Payable. 231 Sales Tax Payable 232 Interest Payable 241 Notes Payable 251 Bonds Payable 252 Discount on Bonds Payable 253 Premium on Bonds Payable 534 Selling Expenses 535 Rent Expense 536 Insurance Expense 537 Office Supplies Expense 538 Store Supplies Expense 541 Bad Debt Expense 561 Depreciation Expense-Store Equipment 562 Depreciation Expense-Office Equipent 590 Miscellaneous Expense 710 Interest Expense 711 Loss on Redemption of Bonds EQUITY Chart of Accounts 241 NOIES Payable 251 Bonds Payable 252 Discount on Bonds Payable 253 Premium on Bonds Payable 590 Miscellaneous Expense 710 Interest Expense 711 Loss on Redemption of Bonds EQUITY 311 Common Stock 312 Paid-In Capital in Excess of Par-Common Stock 315 Treasury Stock 321 Preferred Stock 322 Paid-In Capital in Excess of Par-Preferred Stock 331 Paid-In Capital from Sale of Treasury Stock 340 Retained Earnings 351 Cash Dividends. 352 Stock Dividends. 13 Final Questions 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. EA X