On January $1,$ Year $1,$ Knorr Corporation issued $$1,400,000$ of $6\%,5-$year bonds dated January $1,$ Year $1.$ The bonds pay interest annually on December $31.$ The bonds were issued to yield $7\%.$ Bond issue costs associated with the bonds totaled $$27,560\mathrm{.}53.$

Required:

Prepare the journal entries to record the following:

January $1,$ Year $1$ Sold the bonds at an effective rate of $7\%$

December $31,$ Year $1$ First interest payment using the effective interest method

December $31,$ Year $1$ Amortization of bond issue costs using the straight$-$line method

December $31,$ Year $2$ Second interest payment using the effective interest method

December $31,$ Year $2$ Amortization of bond issue costs using the straight$-$line method