On January 2, 2015, Garage Master Construction, Inc.issued $500,000, 10-year bonds for $574,540.The bonds pay interest on June 30 and December 31.The face rate is 8% and the market rate is 6%.The interest expense on the bonds at June 30, 2015 is

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The interest expense is calculated using the market rate of 6% on the carrying amount of the bonds. The carrying amount is $574,540, so the interest expense for six months is $574,540 * 3% = $17,236.