Question

Entries for Bonds Payable and Installment Note Transactions

The following transactions were completed by Hobson Inc., whosefiscal year is the calendar year:

2016
July 1.	Issued $4,370,000 of five-year, 8% callable bonds dated July 1,2016, at a market (effective) rate of 9%, receiving cash of$4,197,109. Interest is payable semiannually on December 31 andJune 30.
Oct. 1.	Borrowed $170,000 as a 10-year, 8% installment note from MarbleBank. The note requires annual payments of $25,335, with the firstpayment occurring on September 30, 2017.
Dec. 31.	Accrued $3,400 of interest on the installment note. Theinterest is payable on the date of the next installment notepayment.
Dec. 31.	Paid the semiannual interest on the bonds. The bond discountamortization of $17,289 is combined with the semiannual interestpayment.
Dec. 31.	Closed the interest expense account.
2017
June 30.	Paid the semiannual interest on the bonds. The bond discountamortization of $17,289 is combined with the semiannual interestpayment.
Sept. 30.	Paid the annual payment on the note, which consisted ofinterest of $13,600 and principal of $11,735.
Dec. 31.	Accrued $3,165 of interest on the installment note. Theinterest is payable on the date of the next installment notepayment.
Dec. 31.	Paid the semiannual interest on the bonds. The bond discountamortization of $17,289 is combined with the semiannual interestpayment.
Dec. 31.	Closed the interest expense account.
2018
June 30.	Recorded the redemption of the bonds, which were called at 98.The balance in the bond discount account is $103,735 after paymentof interest and amortization of discount have been recorded.(Record the redemption only.)
Sept. 30.	Paid the second annual payment on the note, which consisted ofinterest of $12,661 and principal of $12,674.

Required:

1. Journalize the entries to record theforegoing transactions. For compound transactions, if an amount boxdoes not require an entry, leave it blank or enter "0". Whenrequired, round your answers to the nearest dollar.

Date	Account	Debit	Credit
2016
July 1	Cash
	Discount on bonds payable
	Bonds payable
Oct. 1	Cash
	Notespayable
Dec. 31-Note	Interest expense
	Notespayable
Dec. 31-Bond	Cash
	Interest expense
	Gain on bonds payable
Dec. 31-Closing	Bonds payable
	Discount onbonds payable
2017
June 30	Cash
	Discount on bonds payable
	Interest expense
Sept. 30	Interest expense
	Notes payable
	Cash
Dec. 31-Note
Dec. 31-Bond	Notes payable
	Interest expense
	Cash
Dec. 31-Closing	Discount on bonds payable
	Bondspayable
2018
June 30	Bonds payable
	Cash
	Gain on redemption of bonds
Sept. 30
	Notes payable

2. Indicate the amount of the interest expensein (a) 2016 and (b) 2017.

a. 2016 $

b. 2017 $

3. Determine the carrying amount of the bondsas of December 31, 2017.
$