208. On January 1, Polk Corporation issued $6,000,000, 14%, 5-year bonds with interest payable on July 1 and January 1. The bonds sold for $6,591,240. The market rate of interest for these bonds was 12%. On the first interest date, using the effective-interest method, the debit entry to Interest Expense is for

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Using the effective-interest method, we calculate the interest expense as:
Interest Expense = Carrying Value x Effective Interest Rate
At the first interest payment date, the carrying value of the bond is the issue price minus the amortized discount:
Carrying Value = $6,591,240 - Total Discount
Total Discount = $6,000,000 x (12% - 14%) x 6/12 = $360,000
Carrying Value = $6,591,240 - $360,000 = $6,231,240
The effective interest rate is the market rate at the time of issuance, which is 12%. Therefore:
Interest Expense = $6,231,240 x 12% x 6/12 = $395,474
So, the answer is (C) $395,474.