The following transactions were completed by Montague

Inc whose fiscal

The following transactions were completed by Montague Inc., whose fiscal year is the calendar
year:2016July 1. Issued $55,000,000 of 10-year, 9% callable bonds dated July 1, 2016, at a
market (effective) rate of 7%, receiving cash of $62,817,040. Interest is payable semiannually
on December 31 and June 30.Oct. 1. Borrowed $450,000 by issuing a six-year, 8% installment
note to Intexicon Bank.The note requires annual payments of $97,342, with the first payment
occurring on September 30, 2017.Dec. 31. Accrued $9,000 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 $390,852 is combined with
the semiannual interest payment.31. Closed the interest expense account.2017June 30. Paid
the semiannual interest on the bonds. The bond discount amortization of $390,852 is combined
with the semiannual interest payment.Sept. 30. Paid the annual payment on the note, which
consisted of interest of $36,000 and principal of $61,342.Dec. 31. Accrued $7,773 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
$390,852 is combined with the semiannual interest payment.31. Closed the interest expense
account.2018June 30. Recorded the redemption of the bonds, which were called at 103. The
balance in the bond premium account is $6,253,632 after payment of interest and amortization
of premium have been recorded. (Record the redemption only.)Sept. 30. Paid the second
annual payment on the note, which consisted of interest of $31,093 and principal of
$66,249.Instructions1. Journalize the entries to record the foregoing transactions.2. Indicate the
amount of the interest expense in (a) 2016 and (b) 2017.3. Determine the carrying amount of
the bonds as of December 31, 2017.View Solution: The following transactions were completed
by Montague Inc whose fiscal
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