Debt Issued at a Discount (Straight Line) On January 1, 2020, Drew Company issued $350,000, 5-year bonds for $320,000. The stated rate of interest was 7% and interest is paid annually on December 31. Required: Prepare the necessary journal entry on December 31, 2021, assuming the straight-line method is followed. 2021 Dec 31 Interest Expense 26,180 x Discount on Bonds Payable Cash (Record interest expense) When bands are issued, any premium or discount is recorded in a separate valuation account