Warner Company Issued $4,000,000 of 6%, 10-Year Bonds on One

Multiple Choice

Warner Company issued $4,000,000 of 6%, 10-year bonds on one of its interest dates for $3,454,800 to yield an effective annual rate of 8%. The effective-interest method of amortization is to be used. What amount of discount (to the nearest dollar) should be amortized for the first interest period?

A) $112,710
B) $54,520
C) $72,770
D) $36,384