Puget Corporation owns 80 percent of Sound Company's voting shares. On January 1, 20X7, Sound sold bonds with a par value of $300,000 when the market rate was 7 percent. Puget purchased two thirds of the bonds; the remainder was sold to nonaffiliates. The bonds mature in ten years and pay an annual interest rate of 6 percent. Interest is paid semiannually on June 30 and Dec 31.Based on the information given above, what amount of interest expense should be reported in the 20X8 consolidated income statement?
A. $0
B. $6,511
C. $6,548
D. $19,643
Answer: C
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