Lassen Corporation issued ten-year term bonds on January 1, 2010, with a face value of $800,000 . The face interest rate is 6 percent and interest is payable semi-annually on June 30 and December 31 . The bonds were issued for $690,960 to yield an effective annual rate of 8 percent. The effective interest method of amortization is to be used. The carrying value of the bonds payable on the
December 31, 2010, balance sheet date should be (rounded to the nearest dollar)
a. $696,412.
b. $698,236.
c. $698,382.
d. $690,960.
C
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