On August $31,$ Wildhorse Co$.$ partially refinanced $$442,000$ of its outstanding $10\%$ note payable made one year ago to Dugan State Bank by paying $$442,000$ plus $$44,200$ interest, having obtained the $$486,200$ by using $$133,120$ cash and signing a new one$-$year $$388,000$ note discounted at $9\%$ by the bank.

$($a$)$

Your answer is correct.

Make the entry to record the partial refunding. Assume Wildhorse Co$.$ makes reversing entries when appropriate. $($Credit account titles are automatically indented when the 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. List all debit entries before credit entries.$)$

Date

August $31$

Interest Expense

Discount on Notes Payable

Notes Payable

Cash

Notes Payable

$($b$)$

Prepare the adjusting entry at December $31,$ assuming straight$-$line amortization of the discount. $($Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select $"$No Entry" for the account titles and enter Ofor the amounts. List debit entry before credit entry.$)$