The Designer Company Issued 10-Year Bonds on January 1, 2011

Multiple Choice

The Designer Company issued 10-year bonds on January 1, 2011. The 6% bonds have a face value of $800,000 and pay interest every January 1 and July 1. The bonds were sold for $690,960 based on the market interest rate of 8%. Designer uses the effective-interest method to amortize bond discounts and premiums. On July 1, 2011, Designer should record interest expense (round to the nearest dollar) of

A) $27,638
B) $24,000
C) $48,000
D) $55,277