Paine Inc. issues $4 million, 5-year, 8% bonds at 103, with interest payable on January 1. The

Question:

Paine Inc. issues $4 million, 5-year, 8% bonds at 103, with interest payable on January 1. The straight-line method is used to amortize bond premium.
(a) Prepare the journal entry to record the sale of these bonds on January 1, 2010.
(b) Prepare the journal entry to record interest expense and bond premium amortization on December 31, 2010, assuming no previous accrual of interest.