Denver Company Issued Bonds with a Face Value of $100,000

Multiple Choice

Denver Company issued bonds with a face value of $100,000 and a stated interest rate of 8%. The bonds have a life of five years and were sold at 102 ½. If Denver amortizes discounts and premiums using the straight-line method, the amount of interest expense each full year would be:

A) $7,500.
B) $8,500.
C) $8,000.
D) $8,200.