On June 30, 2009, Hardy Corporation Issued $10 Million of Its

On June 30, 2009, Hardy Corporation issued $10 million of its 8% bonds for $9.2 million. The bonds were priced to yield 10%. The bonds are dated June 30, 2009, and mature on June 30, 2016. Interest is payable semiannually on December 31 and July 1. If the effective interest method is used, by how much should the bond discount be reduced for the 6 months ended December 31, 2009?

A) $32,000
B) $40,000
C) $46,000
D) $60,000 5% $9.2 million = $460,000
4% $10 million = $400,000
$460,000 400,000 =$60,000