Palmer Corporation owns 70% of the ordinary shares of Scott Corporation and uses the equity method to account for its investment. Scott purchased $96,000 par of Palmers 10% bonds from outsiders on October 1, Year 5, for $91,200. Palmers bond liability on October 1, Year 5, consisted of $480,000 par of 10% bonds due on October 1, Year 9, with unamortized discount of $9,600. Interest payment dates are April 1 and October 1 of each year, and straight-line amortization is used. Intercompany bond gains (losses) are to be allocated to each affiliate. Both companies have a December 31 year-end. Scotts financial statements for Year 5 indicate that it earned profit of $68,000 and that on December 31, Year 5, it declared a dividend of $13,800.

Prepare the journal entries under the equity method that Palmer would make in Year 5. (Assume a 40% tax rate.) Compute the amount of the bond liability that will appear on the December 31, Year 5, consolidated statement of financial position. (Input all values as positive numbers. Omit $ sign in your response.)