On March $1,$ year $1,$ Carter Corporation issued $$15,000,000$ in bonds that mature in $10$ years.The bonds have a coupon rate of $6\mathrm{.}3$ percent and pay interest on March $1$ and September $1.$ When the bonds were sold, the market rate of interest was $6$ percent. Carter uses the effective$-$interest method to amortize bond discount or premium.By December $31,$ year $1,$ the market interest rate had increased to $7$ percent.

Required:$1.$ Record the issuance of the bond on March $1,$ year $1$

$\mathrm{.}2$ Compute the present value of the difference between the interest paid each six months $($$$472,500)$ and the interest demanded by the market $($$$15$ million $\backslash$times $6\%\backslash$times $6/12=$ $$450,000).$Use the market rate of interest and the $10-$year life of the bond in your present value computation. What does this amount represent? Explain.

$3$ Record the payment of interest on September$1,$ year $1$

$\mathrm{.}4.$ Record the adjusting entry for accrued interest on December $31,$ year $1.$

$5.$ Why does interest expense change each year when the effective$-$interest method is used?