Answer Happy

The following transactions were completed by Winklevoss Inc., whose fiscal year is the calendar year Year 1 July Dec Year 2 June Dec. Year 3 June Issued $39,500,000 of 20-year, 7% callable bonds dated July 1, Year 1, at a market (effective) rate of 8%, receiving cash of $35,590,960. Interest is payable semiannually on December 31 and June 30. Paid the semiannual interest on the bonds. The bond discount amortization of $97,726 is combined with the semiannual interest payment. 31 31 Closed the interest expense account 30 Paid the semiannual interest on the bonds. The bond discount amortization of $97,726 is combined with the semiannual interest payment 31 Paid the semiannual interest on the bonds. The bond discount amortization of $97,726 is combined with the semiannual interest payment. 31 Closed the interest expense account. 30 Recorded the redemption of the bonds, which were called at 98. The balance in the bond discount account is $3,518,136 after payment of interest and amortization of discount have been recorded. (Record the redemption only)
Required: 1. Journalize the entries to record the transactions Round all amounts to the nearest dollar. Refer to the Chart of Accounts for exact wording of account titles 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