On January 1, 2014, Trout Corp.sold $500,000, 10% bonds for $442,648 to yield 12%. Interest is payable semi-annually on January 1 and July 1.Trout uses the effective interest method of amortizing bond discount.What amount should Trout report as interest expense for the six months ended June 30, 2014?

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The correct answer is B.The semi-annual interest payment is $25,000 (10% x $500,000 / 2). The effective interest expense for the six months ended June 30, 2014 is $26,559 ($442,648 x 12% / 2).