$20$ Y $1$

July $1$ Issued $$74,000,000$ of $20-$year, $11\%$ callable bonds dated July $1,20Y1,$ at a market $($effective$)$ rate of

$13\%,$ receiving cash of $$63,532,267.$ Interest is payable semiannually on December $31$ and June $30.$

Dec. $31$ Paid the semiannual interest on the bonds. The bond discount amortization of $$261,693$ is combined

with the semiannual interest payment.

$20$ Y $2$

June $30$ Paid the semiannual interest on the bonds. The bond discount amortization of $$261,693$ is combined

with the semiannual interest payment.

Dec. $31$ Paid the semiannual interest on the bonds. The bond discount amorization of $$261,693$ is combined

with the semiannual interest payment.

$20$ Y $3$

June $30$ Recorded the redemption of the bonds, which were called at $98.$ The balance in the bond discount

account is $$9,420,961$ after payment of interest and amortization of discount have been recorded.

$($Record the redemption only.$)$

Required:

Journalize the entries to record the transactions. Round all amounts to the nearest dollar. Refer to the Chart of Accounts for exact wording of

account titles.

Indicate the amount of the interest expense in $($a$)20$ Y $1$ and $($b$)20$ Y $2.$

Determine the carning amount of the bonds as of December $31,20$ Y$2.$