On January 1, Twister Enterprises issues $540,000 of 6% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year. The market interest rate on the issue date is 7%. National Hydraulics, a supplier of mechanical parts to Twister Enterprises, purchases 25% of the bond issue ($135,000 face amount) at a discount for $120,585.

2. Record the purchase of the bonds by National Hydraulics and the receipt of the first two semiannual interest payments on June 30 and December 31. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)