Silcon Company issued $500,000 of 6%, 10-year bonds on one of its interest dates for $431,850 to yield an effective annual rate of 8%. The effective-interest method of amortization is to be used. Interest is paid annually.
The journal entry on the first interest payment date, to record the payment of interest and amortization of discount will include a

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The interest expense is calculated using the effective interest rate on the carrying amount of the bonds. The carrying amount is $431,850, and the effective interest rate is 8%, so the interest expense is $34,548. The cash paid for interest is 6% of $500,000, which is $30,000. The difference of $4,548 is the amortization of the discount, which is credited to Discount on Bonds Payable.

Silcon Company Issued $500,000 of 6%, 10-Year Bonds on One