The following transactions were completed by Hocking Inc., a publicly traded company, whose fiscal year is the calendar year:

2015

Jul. 1. Issued $18,000,000 of five-year, 5% callable bonds dated July 1, 2015, at an effective rate of 6%, receiving cash of $17,232,281.74. Interest is payable semi- annually on December 31 and June 30.

Oct. 1. Borrowed $800,000 as a 10-year, 7% installment note from Royal Bank. The note requires annual payments of $113,902, with the first payment occurring on September 30, 2016.

Dec. 31. Accrued 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.

2016

Jun. 30. Paid the semiannual interest on the bonds.

Sep. 30. Paid the annual payment on the note, which consisted of interest of $56,000 and principal of $57,902.

Dec. 31. Accrued 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.

2017

Jun. 30. Paid the semiannual interest on the bonds. Recorded the redemption of the bonds, which were called at 97.

Instructions

1. Journalize the entries to record the foregoing transactions, using the effective interest method for amortization.

2. Show the reporting of the liabilities on the statement of financial position as at December 31, 2015, rounding numbers to the nearest whole dollar.