Solderman Company issued $500,000,6%,10-year bonds for $432,800 with a market rate of 8%.The effective-interest method of amortization is to be used and interest is paid annually.The journal entry on the first interest payment date would include a:

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The interest expense is calculated using the market rate (8%) on the carrying amount of the bonds. The cash paid is the coupon rate (6%) on the face value. The difference is credited to Discount on Bonds Payable.

Solderman Company Issued $500,000,6%,10-Year Bonds for $432,800 with a Market