Presented below is the partial bond discount amortization schedule for Gomez Corp. Gomez uses the effective-interest method of amortization.

(a) Prepare the journal entry to record the payment of interest and the discount amortization at the end of period 1.
(b) Explain why interest expense is greater than interest paid.
(c) Explain why interest expense will increase each period.

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Interest Bond Interest Interest to Expense to Discount Unamortized Carrying Periods Be Paid Be Recorded Amortization Discount $38,609 35,539 32,316 Value $961,391 964,461 967,684 Issue date $45,000 45,000 $48,070 48,223 $3,070 3,223