Great Lake Glassware Company issues $1,121,000 of its 12%,10-year bonds at 99 on February 28,2018.The bonds pay interest on February 28 and August 31.Assume that Great Lake uses the straight-line method for amortization.The journal entry to record the first interest payment on August 31,2018 includes a ________.

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The interest expense is calculated by adding the cash interest payment to the amortization of the bond discount. The cash interest payment is $1,121,000 * 12% * (6/12) = $67,260. The bond was issued at 99, so the discount is $1,121,000 * 1% = $11,210. The straight-line amortization of the discount over 20 periods (10 years, semi-annual) is $11,210 / 20 = $561. Therefore, the interest expense is $67,260 + $561 = $67,821.

Great Lake Glassware Company Issues $1,121,000 of Its 12%,10-Year Bonds