On the first day of the fiscal year, a company issues an $688,000, 8%, 5-year bond that pays semiannual interest of $27,520 ($688,000 8% 1/2), receiving cash of $646,720.

Required:

Journalize the entry to record the first interest payment and the amortization of the related bond discount using the straight-line method on December 31. Refer to the Chart of Accounts for exact wording of account titles.There should be 3 rows in this journal, be sure to include if the journal entry is debit or credit as well.

Chart of Accounts.

ASSETS
110	Cash
111	Petty Cash
112	Accounts Receivable
113	Allowance for Doubtful Accounts
114	Notes Receivable
115	Interest Receivable
121	Merchandise Inventory
122	Supplies
131	Prepaid Insurance
140	Land
151	Building
152	Accumulated Depreciation-Building
153	Equipment
154	Accumulated Depreciation-Equipment

	LIABILITIES
210	Accounts Payable
221	Salaries Payable
231	Sales Tax Payable
241	Notes Payable
242	Interest Payable
251	Bonds Payable
252	Discount on Bonds Payable
253	Premium on Bonds Payable

	EQUITY
310	Owner, Capital
311	Owner, Drawing
312	Income Summary