Lassen Corporation issued ten-year term bonds on January 1, 2010, with a face value of $800,000 . The face interest rate is 8 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 10 percent. The effective interest method of amortization is to be used. The entry on June 30, 2010, to record the payment of
interest and amortization of discount will be:
a. Bond Interest Expense 32,000
Cash 32,000
b. Bond Interest Expense 34,548
Unamortized Bond Discount 2,548
Cash 32,000
c. Bond Interest Expense 34,548
Cash 34,548
d. Bond Interest Expense 32,000
Unamortized Bond Discount 32,000
B
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