Grocery Corporation sold $560,000, 7 percent notes on January 1 of this year at a market rate of 8 percent. The notes were dated also on January 1 with interest to be paid each December 31; they mature in 10 years. Use effective-interest amortization and a discount account. Use effective-interest amortization.

Show how the interest expense, interest payment, and notes payable should be reported on the financial statements for this year.