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Entries for Bonds Payable and Installment Note Transactions The following transactions were completed by Hobson Inc., whose fiscal year is the calendar year: 2014 July 1. Issued $5,760,000 of five-year, 10% callable bonds dated July 1, 2014, at a market (effective) rate of 12%, receiving cash of $5,336,059. Interest is payable semiannually on December 31 and June 30. Oct. 1. Borrowed $170,000 as a 10-year, 8% installment note from Marble Bank. The note requires annual payments of $25,335, with the first payment occurring on September 30, 2015. Dec. 31. Accrued $3,400 of interest on the installment note. The interest is payable on the date of the next installment note payment. Dec. 31. Paid the semiannual interest on the bonds. The bond discount is amortized annually in a separate journal entry. Dec. 31. Recorded bond discount amortization of $42,394, which was determined using the straight-line method. Dec. 31. Closed the interest expense account. 2015 June 30. Paid the semiannual interest on the bonds. Sept. 30. Paid the annual payment on the note, which consisted of interest of $13,600 and principal of $11,735. Dec. 31. Accrued $3,165 of interest on the installment note. The interest is payable on the date of the next installment note payment. Dec. 31. Paid the semiannual interest on the bonds. The bond discount is amortized annually in a separate journal entry. Dec. 31. Recorded bond discount amortization of $84,788, which was determined using the straight-line method. Dec. 31. Closed the interest expense account. 2016 June 30. Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $254,365 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 $12,661 and principal of $12,674. Required: 1. Journalize the entries to record the foregoing transactions. For compound transactions, if an amount box does not require an entry, leave it blank or enter "0". When required, round your answers to the nearest dollar. Date Account Debit Credit 2014 July 1 SelectBonds payableCashGain on bonds payableInterest expenseInterest payableNotes payableItem 1 SelectBonds payableDiscount on bonds payableInterest expenseInterest payableLoss on bonds payablePremium on bonds payableItem 4 SelectBonds payableCashDiscount on bonds payableInterest expenseIncome summaryPremium on bonds payableItem 7 Oct. 1 SelectBonds payableCashDiscount on bonds payableInterest expenseInterest payableNotes payableItem 10 SelectBonds payableCashDiscount on bonds payableInterest expenseInterest payableNotes payableItem 12 Dec. 31-Note SelectBonds payableCashDiscount on bonds payableInterest expenseInterest payableNotes payableItem 14 SelectBonds payableCashDiscount on bonds payableInterest expenseInterest payableNotes payableItem 16 Dec. 31-Bond SelectBonds payableCashIncome summaryInterest expenseInterest payableNotes payableItem 18 SelectBonds payableCashGain on bonds payableInterest expenseInterest payableNotes payableItem 20 Dec. 31-Amort. SelectBonds payableCashDiscount on bonds payableIncome summaryInterest expenseInterest payableItem 22 SelectBonds payableCashDiscount on bonds payableInterest expenseInterest payableLoss on bonds payableItem 24 Dec. 31-Closing SelectBonds payableCashDiscount on bonds payableIncome summaryInterest expenseNotes payableItem 26 SelectBonds payableCashDiscount on bonds payableIncome summaryInterest expenseInterest payableItem 28 2015 June 30 SelectBonds payableCashDiscount on bonds payableInterest expenseInterest payableNotes payableItem 30 SelectBonds payableCashDiscount on bonds payableInterest expenseInterest payableNotes payableItem 32 Sept. 30 SelectAccounts payableBonds payableCashDiscount on bonds payableIncome summaryInterest expenseItem 34 SelectAccounts payableBonds payableCashIncome summaryInterest payableLoss on bonds payableItem 37 SelectAccounts payableBonds payableCashDiscount on bonds payableGain on bonds payableNotes payableItem 40 SelectAccounts payableBonds payableCashInterest expenseInterest payableNotes payableItem 43 Dec. 31-Note SelectAccounts payableCashDiscount on bonds payableInterest expenseInterest payableNotes payableItem 46 SelectAccounts payableCashDiscount on bonds payableInterest expenseInterest payableNotes payableItem 48 Dec. 31-Bond SelectBonds payableCashInterest expenseInterest payableLoss on bonds payableNotes payableItem 50 SelectAccounts payableBonds payableCashGain on bonds payableInterest expenseInterest payableItem 52 Dec. 31-Amort. SelectBonds payableCashDiscount on bonds payableInterest expenseInterest payableLoss on bonds payableItem 54 SelectBonds payableCashDiscount on bonds payableGain on bonds payableInterest expenseInterest payableItem 56 Dec. 31-Closing SelectCashDiscount on bonds payableIncome summaryInterest expenseInterest payableNotes payableItem 58 SelectCashBonds payableDiscount on bonds payableIncome summaryInterest expenseInterest payableItem 60 2016 June 30 SelectBonds payableCashGain on redemption of bondsInterest expenseInterest receivableNotes payableItem 62 SelectCashDiscount on bonds payableInterest expenseInterest payableLoss on redemption of bondsNotes payableItem 65 SelectBonds payableDiscount on bonds payableGain on redemption of bondsInterest expenseInterest payableInterest revenueItem 68 SelectBonds payableCashGain on redemption of bondsInterest expenseInterest payableNotes payableItem 71 Sept. 30 SelectAccounts payableBonds payableCashGain on bonds payableIncome summaryInterest expenseItem 74 SelectAccounts payableBonds payableCashDiscount on bonds payableInterest payableLoss on bonds payableItem 77 SelectAccounts payableBonds payableCashDiscount on bonds payableLoss on redemption of bondsNotes payableItem 80 SelectBonds payableCashDiscount on bonds payableInterest expenseInterest payableNotes payableItem 83 2. Indicate the amount of the interest expense in (a) 2014 and (b) 2015. a. 2014 $ b. 2015 $ 3. Determine the carrying amount of the bonds as of December 31, 2015. $

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