157. On January 1, a company issues bonds dated January 1 with a par value of $480,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 10% and the bonds are sold for $461,461. The journal entry to record the first interest payment using the effective interest method of amortization is:

• Debit Interest Payable $21,600; credit Cash $21,600.

• Debit Interest Expense $23,073; credit Premium on Bonds Payable $1,473; credit Cash $21,600.

• Debit Interest Expense $20,127; debit Premium on Bonds Payable $1,473; credit Cash $21,600.

• Debit Interest Expense $20,127; debit Discount on Bonds Payable $1,473; credit Cash $21,600.

• Debit Interest Expense $23,073; credit Discount on Bonds Payable $1,473; credit Cash $21,600.

160. Wallace, Simpson, and Prince are partners and share income and losses in a 2:6:2 ratio. The partnership's capital balances are Wallace, $69,680; Simpson, $80,400; and Prince, $91,120. Royal is admitted to the partnership on July 1 with a 10% equity and invests $26,800. The partnership would record the admission of Royal into the partnership as:

• Debit Cash $16,800; debit Wallace, Capital $2,000; debit Simpson, Capital, $6,000; debit Prince, Capital $2,000; credit Royal, Capital $26,800.

• Debit Cash $26,800; credit Royal, Capital $26,800.

• Debit Cash $5,360; credit Prince, Capital $5,360.

• Debit Cash $26,800; credit Simpson, Capital $2,680, credit Royal, Capital $24,120.

• Debit Wallace, Capital $5,360; debit Simpson, Capital, $16,080; debit Prince, Capital $5,360; credit Royal, Capital $26,800.