On 2 January 2014, Mahoney Sales Issued $10 000 in Debentures

Multiple Choice

On 2 January 2014, Mahoney Sales issued $10 000 in debentures for $9 400. They were 5- year debentures with a stated rate of 4%, and pay half- yearly interest payments. Mahoney Sales uses the straight- line method to amortise the debenture discount. On 30 June 2014, when Mahoney makes the first payment to debenture holders, how much will they report as interest expense?

A) $260
B) $200
C) $400
D) $60