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

Interest Bond Interest Interest to Expense to Discount Unamortized Carrying Periods Be Paid Be Recorded Amortization Discount Value Issue date $62,311 $937,689 1 $45,000 $46,884 $1,884 60,427 939,573 2 45,000 46,979 1,979 58,448 941,552 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.