On January 1 of Year 1, Congo Express Airways issued $3,250,000 of 5% bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $2,930,000 and the market rate of interest for similar bonds is 6%. The bond premium or discount is being amortized at a rate of $10,667 every six months. The amount of interest expense recognized by Congo Express Airways on the bond issue in Year 1 would be:
A. $183,834.
B. $162,500.
C. $195,000.
D. $141,166.
E. $91,917.
Answer: A
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