Chapter 14 Long-Term Liabilities: Bonds and Notes 715 PR 14-4B Entries for bo The following transactions compl calendar year: Year 1 July 1, issued $55,000,000 of 10-year, 9% callable bonds dated July 1, Year nds payable and installment 644,484 transactions cuons were completed bymenntagtetransactions fiscal OBJ 3, xcel market (effective) rate of 7%, receiving cash of $62,817,040. semiannually on December 31 and June 30 1, at a Interest is payable eral ger Oct. Borrowed $450,000 by issuing a six-year, 8% installment note to 1. note requires annual payments of $97,342, with the first payment occurring on September 30, Year 2. Dec. 31. A ccrued $9,000 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 premium amortization of $390,852 is combined with the semiannual interest payment. Year 2 June 30. Paid the semiannual interest on the bonds. The bond premium amortization of Sept. 30. Paid the Dec. 31. Accrued $7,773 of interest on the installment note. The interest is payable on $390,852 is combined with the semiannual interest payment. and principal of $61,342 the date of the next installment note payment. $390,852 is combined with the semiannual interest payment. annual payment on the note, which consisted of interest of $36,000 31. Paid the semiannual interest on the bonds. The bond premium amortization of Year 3 in the bond premium account is $6,253,632 after payment of interest and amor- tization of premium have been recorded. Record the redemption only. June 30. Recorded the redemption of the bonds, which were called at 103. The balance Sept. 30. Paid the second annual payment on the note, which consisted of interest of $31,093 and principal of $66,249. Instructions 1. Journalize the entries to record the foregoing transactions 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