1. Journalize the following transactions of Farm Equipment Limited:

2017

Jan. 1 Issued $100,000 of 8%, five-year bonds at 94.

July 1 Paid semi-annual interest and amortized the bonds by the straight-line method on our 8% bonds payable.

Dec. 31 Accrued semi-annual interest expense and amortized the bonds by the straight-line method on our 8% bonds payable.

2018

Jan. 1 Paid semi-annual interest.

2022

Jan. 1 Paid the 8% bonds at maturity.

2. At December 31, 2017, after all year-end adjustments, determine the carrying amount of Farm Equipment Limited's bonds payable, net.

3. For the six months ended July 1, 2017, determine the following for Farm Equipment Limited:

a. Interest expense

b. Cash interest paid

What causes interest expense on the bonds to exceed cash interest paid?