The Merchant Company issued 10-year bonds on January 1 . The 15% bonds have a face value of $100,000 andpay interest every January 1 and July 1 . The bonds were sold for $117,205 based on the market interest rate of12%. Merchant uses the effective interest method to amortize bond discounts and premiums. On July 1 of the firstyear, Merchant should record interest expense (round to the nearest
dollar) of
a. $7,032
b. $7,500
c. $8,790
d. $14,065
a
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