Using the straight-line method to allocate bond interest expense, the issuer records the second interest payment (on December 31, 2008) with a debit to Premium on Bonds Payable in the amount of

(a) $7,470,

(b) $530,

(c) $8,000, or (d ) $400.

On December 31, 2007, a company issues 16%, 10-year bonds with a par value of $100,000. Interest is paid on June 30 and December 31. The bonds are sold to yield a 14% annual market rate at an issue price of $110,592. Use this information to answer question AppendixLO1