Presented below is the partial bond discount amortization schedule for Cardosa Use effective-interest method Corp. Cardosa uses the effective-interest method of amortization.

Instructions

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

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

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

Transcribed Image Text:

Semiannual Interest Periods Issue date 1 2 Interest Interest to Be Paid Expense to Discount Unamortized Bond Carrying Be Recorded Amortization Discount Value $62.311 $937,689 $45.000 45.000 $46,884 46.979 $1.884 60.427 939.573 1.979 58,448 941.552