Presented below is the partial bond discount amortization schedule for Rohr Corp., which uses the effective-interest method of amortization.

\section*{Instructions}

(a) Prepare the journal entry to record the payment of interest and the discount amortization at the end of period 1.

(b) Explain why interest expense is greater than interest paid.

(c) Explain why interest expense will increase each period.

Transcribed Image Text:

Interest Periods Issue date 1 2 Interest to Be Paid $45,000 45,000 Interest Expense to Be Recorded Bond Discount Amortization Unamortized Carrying Discount Value $38,609 $961,391 $48,070 $3,070 35,539 964,461 48,223 3,223 32,316 967,684