On January 1, 2016, Tara, Inc. purchased $100,000 of K Corp bonds at a price of $95,000. The K Corp bonds pay 6% interest, but were purchased when the market interest rate for bonds of similar risk and maturity was 7%. The bonds pay interest semiannually on January 1 and July 1 of each year. Tara accounts for these bonds as a held-to-maturity security and uses the effective interest method.

Required:

Prepare the necessary general journal entries to record the purchase of the K Corp bonds, the July 1

interest payment and discount amortization and the December 31 interest accrual and discount

amortization.