on january 1 electro inc. issued $740,000 of 7.5%, four-year bonds that pay interest semiannually on june 30 and december 31. they are issued at $680,186 and their market rate is 10% at the issue date. after recording the entry for the issuance of the bonds, bonds payable had a balance of $740,000 and discount on bonds payable had a balance of $59,814. electro uses the effective interest bond amortization method. the first semiannual interest payment was made on june 30.