Puget Corporation Owns 80 Percent of Sound Company's Voting Shares

Multiple Choice

Puget Corporation owns 80 percent of Sound Company's voting shares.On January 1,20X7,Sound sold bonds with a par value of $300,000 when the market rate was 7 percent.Puget purchased two thirds of the bonds;the remainder was sold to nonaffiliates.The bonds mature in ten years and pay an annual interest rate of 6 percent.Interest is paid semiannually on June 30 and Dec 31.
-Based on the information given above,what amount of interest expense should be reported in the 20X8 consolidated income statement?

A) $0
B) $6,548
C) $6,511
D) $19,643