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 entry to be recorded on December 31, 2010, for the
payment of interest (rounded to the nearest dollar) and the amortization of discount is:
a. Bond Interest Expense 3,638
Unamortized Bond Discount 3,638
b. Bond Interest Expense 27,784
Unamortized Bond Discount 3,784
Cash 24,000
c. Bond Interest Expense 27,784
Cash 27,784
d. Bond Interest Expense 24,000
Unamortized Bond Discount 24,000
B
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