On July 1 of the current year, a company issued bonds dated July 1 with a par value of $1,000,000. The bonds mature in 10 years. The contract rate of interest is 10%, and interest is paid semiannually on December 31 and June 30. The bonds are sold for $1,100,000. The company uses the straight-line method of amortization.

(a) Prepare the journal entry to record issuance of the bonds on July 1 of the current year (6 points possible).

(b) Prepare the journal entry to record the first interest payment on December 31 of the current year (6 points possible