A company issued 5-year, 7% bonds with a par value of $100,000. The market rate when the bonds were issued was 6.5%. The company received $102,105 cash for the bonds. Using the effective interest method, the amount of recorded interest expense for the first semiannual interest period is:
A. $6,573.90.
B. $3,500.00.
C. $3,318.41.
D. $7,000.00.
E. $1,750.00.
Answer: C
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