Obj. 2 PR 11-3B Entries for bonds payable, including bond redemption The following transactions were completed by Montague Inc., whose fiscal year is the calendar year: Year 1 July 1. Issued $55,000,000 of IOyear, 996 callable bonds dated July 1, Year 1, at a market (effective) rate of 7%, receiving cash of $62,817,040. Interest is payable semiannually on December 31 and June 30. Dec. 31 Paid the semiannual interest on the bonds The bond discount amortization of $390,852 is combined with the semiannual interest payment. Closed the interest expense account 31. Year 2 Paid the semiannual interest on the bonds The bond discount amortization of $390,852 is combined with the semiannual interest payment June 30. Dec. 31. Paid the semiannual interest on the bonds. The bond discount amortization of $390,852 is combined with the semiannual interest payment. 31. Closed the interest expense account. Year 3 Recorded the redemption of the bonds, which were called at 103. The balance in the bond premium account is $6,253,632 after payment of interest and amortization of premium have been recorded. (Record the redemption only.) June 30. 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