On January 1, Mallory Company issued $400,000 of 8%, 5-year bonds when the market rate of interest was 6%. The bonds were issued for $433,698 and interest will be paid annually on December 31. How much premium amortization will Mallory record on the first interest payment date using the effective-interest method?
A. $26,021.88
B. $0
C. $32,000
D. $5,978.12
Answer: D
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