On the first day of its fiscal year, Ebert Company issued $$53,500,000$ of $10-$year, $7\%$ bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a market $($effective$)$ interest rate of $8\%,$ resulting in Ebert receiving cash of $$49,864,758.$ The company uses the interest method.

Required:

a$.$ Journalize the entries to record the following transactions.

Sale of the bonds on January $1.$

First semiannual interest payment on June $30,$ including amortization of discount.

Second semiannual interest payment on December $31,$ including amortization of discount.

b$.$ Compute the amount of the bond interest expense for the first year.

c$.$ Explain why the company was able to issue the bonds for only $$49,864,758$ rather than for the face amount of $$53,500,000.$