Pina, Inc. had outstanding $6,390,000 of 12% bonds (interest payable July 31 and January 31) due in 10 years. On July 1, it issued $8,240,000 of 10%, 15-year bonds (interest payable July 1 and January 1) at 97. A portion of the proceeds was used to call the 12% bonds (with unamortized discount of $63,900) at 101 on August 1.

Prepare adjusting entries at December 31. Use straight-line amortization for the discount.