Pharoah Company issues $5.40 million, 5-year, 7% bonds at 104, with interest payable on January 1. The straight-line method is used to amortize bond premium.

 

Prepare the journal entry to record the sale of these bonds on January 1, 2022. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts.) Date Account Titles and Explanation Debit Credit Jan. Cash 1,164,000 Discount on Bonds Payable 36,000 Bonds Payable 1,200,000 (b) Prepare the journal entry to record interest expense and bond discount amortization on December 31, 2022, assuming no previous accrual of interest. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Dec. Interest Expense 31 Discount on Bonds Payable Interest Payable