Sparks Company Received Proceeds of $423,000 on 10-Year, 8% Bonds

Multiple Choice

Sparks Company received proceeds of $423,000 on 10-year, 8% bonds issued on January 1, 2013. The bonds had a face value of $400,000, 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 2013?

A) $33,840
B) $32,000
C) $32,640
D) $3,384