Gammell Company Issued $50,000 of 9% Bonds with Annual Interest

Multiple Choice

Gammell Company issued $50,000 of 9% bonds with annual interest payments. The bonds mature in ten years. The bonds were issued at $48,000. Gammel Company uses the straight-line method of amortization. Which of the following statements is incorrect?

A) The market rate of interest exceeded the stated rate of interest when the bonds were issued.
B) The annual interest expense exceeds the annual cash interest payment by $200.
C) The annual increase in the bond book value is $200.
D) The annual interest expense is $4,300.