On January 1, 2014, Tonika Corporation Issued a Four-Year, $10,000

Multiple Choice

On January 1, 2014, Tonika Corporation issued a four-year, $10,000, 7% bond. The interest is payable annually each December 31. The issue price was $9,668 based on an 8% effective interest rate. Assuming effective-interest amortization is used, the interest expense on the income statement for the year ended December 31, 2014 is closest to:

A) $677.
B) $883.
C) $773.
D) $700.