On January 1, Year 1, Price Company issued $115,000 of five-year, 7 percent bonds at 97. Interest is payable annually on December 31. The discount is amortized using the straight-line method.

Required

Prepare the journal entries to record the bond transactions for Year 1 and Year 2. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Journal entry worksheet

• Record the entry for issuance of bonds.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
Jan 01	Cash	111,550
	Discount on bonds payable	3,450
	Bonds payable		115,000

• Record the entry for recognizing interest expense on Dec. 31, Year 1.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
Dec 31	Interest expense
	Discount on bonds payable
	Cash		8,050

• Record the entry for recognizing interest expense on Dec. 31, Year 2.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
Dec 31	Interest expense
	Discount on bonds payable
	Cash		8,050