80.2K

Verified Solution

Link Copied!

Entries for Bonds Payable and Installment Note Transactions The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year: Year 1 July 1. Issued $7,210,000 of five-year, 8% callable bonds dated July 1 , Year 1 , at a market (effective) rate of 9%, receiving cash of $6,924,749. Interest is payable semiannually on December 31 and June 30. Oct. 1. Borrowed $430,000 by issuing a 10 -year, 6% installment note to Nicks Bank. The note requires annual payments of $58,423, with the first paryment occurring on September 30, Year 2. Dec. 31. Accrued $6,450 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 discount amortization of $28,525 is combined with the semiannual interest payment. Year 2 June 30. Paid the semiannual interest on the bonds. The bond discount amortization of $28,525 is combined with the semiannual interest payment. Sept. 30. Paid the annual payment on the note, which consisted of interest of $25,800 and principal of $32,623. Dec. 31. Accrued $5,961 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 discount amortization of $28,525 is combined with the semiannual interest payment. Year 3 June 30. Recorded the redemption of the bonds, which were called at 98 . The balance in the bond discount account is $171,151 after payment of interest and amortization of discount have been recorded. Record the redemption only. Sept. 30. Paid the second annual payment on the note, which consisted of interest of $23,843 and principal of $34,580. Required: Round all amounts to the nearest dollar. a. Year 1 : b. Year 2 \& 3. Determine the carrying amount of the bonds as of December 31, Year 2

Answer & Explanation Solved by verified expert

See Answer