On January 1, 2016, a Company Issued $400,000 of 10-Year

Multiple Choice

On January 1, 2016, a company issued $400,000 of 10-year, 12% bonds. The interest is payable semi-annually on June 30 and December 31. The issue price was $413,153 based on a 10% market interest rate. The effective-interest method of amortization is used. Which of the following statements is incorrect?

A) The market rate of interest on the sale date was less than the coupon rate of interest.
B) The book value of the bond will decrease as the bond reaches maturity.
C) The interest expense will decrease as the bond reaches maturity.
D) The amortization of the premium on bonds payable will decrease as the bond matures.