Hernandez Company issued $380,000, 7%, 10-year bonds on January 1, 2025, for $407,968. This price resulted in an effective-interest rate of 6% on the bonds. Interest is payable annually on January 1. Hernandez uses the effective-interest method to amortize bond premium or discount.

Instructions

Prepare the journal entries (rounded to the nearest dollar) to record:

a. The issuance of the bonds.

b. The accrual of interest and the premium amortization on December 31, 2025 .

c. The payment of interest on January 1, 2026 .