RKO Company sold bonds with a face value of $850,000 for $910,000. The bonds have a coupon rate of 8 percent, mature in 10 years, and pay interest annually every December 31.

All of the bonds were sold on January 1 of this year. Using a premium account, record the sale of the bonds on January 1 and the payment of interest on December 31 of this year. RKO uses the effective-interest amortization method. Assume an annual market rate of interest of 7 percent.

Record the sale of the bonds on January 1.

Record the payment of interest on December 31 using effective-interest amortization.