On March 1, year 1, Catalin Corporation issued $40 million in bonds that mature in 10 years. The bonds have a stated interest rate of 5.8 percent and pay interest on March 1 and September 1. When the bonds were sold, the market rate of interest was 6 percent. Catalin uses the effective-interest method. By December 31, year 1, the market interest rate had increased to 6.5 percent. Required: 1. Record the issuance of the bond on March 1, year 1. Catalin uses a discount account. 3. Record the payment of interest on September 1, year 1. 4. Record the adjusting entry for accrued interest on December 31, year 1.