Eve Corporation issues a $9,000,000, 5%, 20-year mortgage note payable on December 31, 2019, to obtain needed financing for the construction of a building addition. The terms provide for annual installment payments of $578,818 on December 31.

i.Prepare the journal entries to record the mortgage loan on December 31, 2019, and the first and second installment payment.

ii.Will the amount of principal reduction in the second installment payment be more or less than with the first installment payment?

b)Presented below are two independent situations:

i)Horton Company redeemed $400,000 face value, 12% bonds at 96 on July 31, 2019. The carrying value of the bonds on the retirement date was $428,500. The bonds pay annual interest and the interest payment due on July 31, 2019, has been made and recorded.

ii)Ball Corporation retired $380,000 face value, 10% bonds on September 30, 2019, at 101. The carrying value of the bonds on the retirement date was $371,500. The bonds pay annual interest and the interest payment due on September 30, 2019, has been made and recorded.

For each of the independent situations, prepare the journal entry to record the retirement of the bonds before maturity.