Sparks Company Received Proceeds of $634,500 on 10-Year, 8% Bonds

Multiple Choice

Sparks Company received proceeds of $634,500 on 10-year, 8% bonds issued on January 1, 2016. The bonds had a face value of $600,000, pay interest annually on December 31st, and have a call price of 102. Sparks uses the straight-line method of amortization. What is the amount of interest Sparks must pay the bondholders in 2016?

A) $50,760
B) $48,000
C) $48,960
D) $5,076