On January 1, 2014, Lace Ltd.sold five year, 12% bonds with a face value of $500,000. Interest will be paid semi-annually on June 30 and December 31.The bonds were sold for $538,500 to yield 10%.Using the effective interest method of amortization of bond discount or premium, interest expense for 2014 is
A) $50,000.
B) $53,696.
C) $53,850.
D) $60,000.
Correct Answer:
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