The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year:

Year 1
July 1.	Issued $5,840,000 of five-year, 10% callable bonds dated July 1, Year 1, at a market (effective) rate of 11%, receiving cash of $5,619,902. Interest is payable semiannually on December 31 and June 30.
Oct. 1.	Borrowed $290,000 by issuing a 10-year, 7% installment note to Nicks Bank. The note requires annual payments of $41,289, with the first payment occurring on September 30, Year 2.
Dec. 31.	Accrued $5,075 of interest on the installment note. The interest is payable on the date of the next installment note payment.
31.	Paid the semiannual interest on the bonds. The bond discount amortization of $22,010 is combined with the semiannual interest payment.
Year 2
June 30.	Paid the semiannual interest on the bonds. The bond discount amortization of $22,010 is combined with the semiannual interest payment.
Sept. 30.	Paid the annual payment on the note, which consisted of interest of $20,300 and principal of $20,989.
Dec. 31.	Accrued $4,708 of interest on the installment note. The interest is payable on the date of the next installment note payment.
31.	Paid the semiannual interest on the bonds. The bond discount amortization of $22,010 is combined with the semiannual interest payment.
Year 3
June 30.	Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $132,058 after payment of 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 $18,831 and principal of $22,458.

Required:

Round all amounts to the nearest dollar.

1. Journalize the entries to record the foregoing transactions. If an amount box does not require an entry, leave it blank.

Date	Account	Debit	Credit
Year 1
July 1	Bonds PayableCashGain on Bonds PayableInterest ExpenseInterest Payable
	Bonds PayableDiscount on Bonds PayableInterest ExpenseLoss on Bonds PayablePremium on Bonds Payable
	Bonds PayableCashDiscount on Bonds PayableInterest ExpensePremium on Bonds Payable
Oct. 1	Bonds PayableCashInterest ExpenseInterest PayableNotes Payable
	Bonds PayableCashInterest ExpenseInterest PayableNotes Payable
Dec. 31-Note	Bonds PayableCashInterest ExpenseInterest PayableNotes Payable
	Bonds PayableCashInterest ExpenseInterest PayableNotes Payable
Dec. 31-Bond	Bonds PayableCashInterest ExpenseInterest PayableNotes Payable
	Accounts PayableBonds PayableDiscount on Bonds PayableInterest ExpenseInterest Payable
	Bonds PayableCashInterest ExpenseInterest PayableNotes Payable
Year 2
June 30	CashDiscount on Bonds PayableInterest ExpenseInterest PayableNotes Payable
	Accounts PayableBonds PayableDiscount on Bonds PayableInterest ExpenseInterest Payable
	Bonds PayableCashInterest ExpenseInterest PayableInterest revenue
Sept. 30	Accounts PayableBonds PayableCashDiscount on Bonds PayableInterest Expense
	Accounts PayableBonds PayableCashInterest PayableLoss on Bonds Payable
	Bonds PayableCashDiscount on Bonds PayableGain on Bonds PayableNotes Payable
	Bonds PayableCashInterest ExpenseInterest PayableNotes Payable
Dec. 31-Note	CashDiscount on Bonds PayableInterest ExpenseInterest PayableNotes Payable
	CashDiscount on Bonds PayableInterest ExpenseInterest PayableNotes Payable
Dec. 31-Bond	Discount on Bonds PayableInterest ExpenseInterest PayableLoss on Bonds PayableNotes Payable
	Accounts PayableBonds PayableDiscount on Bonds PayableInterest ExpenseInterest Payable
	Bonds PayableCashGain on Bonds PayableInterest ExpenseInterest Payable
Year 3
June 30	Bonds PayableCashGain on Redemption of BondsInterest ExpenseNotes Payable
	CashDiscount on Bonds PayableInterest ExpenseLoss on Redemption of BondsNotes Payable
	Bonds PayableDiscount on Bonds PayableGain on Redemption of BondsInterest ExpenseInterest Revenue
	Bonds PayableCashGain on Redemption of BondsInterest ExpenseNotes Payable
Sept. 30	Accounts PayableBonds PayableCashGain on Bonds PayableInterest Expense
	Bonds PayableCashDiscount on Bonds PayableInterest PayableLoss on Bonds Payable
	Bonds PayableCashDiscount on Bonds PayableLoss on Redemption of BondsNotes Payable
	CashDiscount on Bonds PayableInterest ExpenseInterest PayableNotes Payable

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.