On January 1, 2014, a Corporation Issued $400,000 of 10-Year

Multiple Choice

On January 1, 2014, a corporation issued $400,000 of 10-year, 12% bonds. The interest is payable semi-annually on June 30 and December 31. The issue price was $413,153 based on a 10% effective (market) interest rate. Assuming the effective-interest method of amortization is used, what is the book value of the bond liability as of June 30, 2014 (to the nearest dollar) ?

A) $400,000.
B) $416,495.
C) $409,811.
D) $403,342.