PLEASE NOTE: THIS PROBLEM WORKS WITH A DISCOUNT ON BONDS PAYABLE, NOT A PREMIUM. Meaning that everywhere you would debit the premium, you will credit the discount. Also, the last entry will have a loss instead of a gain.

PR $11-3$A Entries for bonds payable, including bond redemption

Obj. $2$

The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year:

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July $1.$ Issued $$74,000,000$ of $20-$year, $11\%$ callable bonds dated July $1,20$Y$1,$ at a market $($effective$)$ rate of $13\%,$ receiving cash of $$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.

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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 amortization of $$261,693$ is combined with the semiannual interest payment.

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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.$)$

Instructions

Journalize the entries to record the transactions. Round all amounts to the nearest dollar.

Indicate the amount of the interest expense in $($a$)20Y1$ and $($b$)20Y2.$

Determine the carrying amount of the bonds as of December $31,20Y2.$