Cramer Company sold five-year, 6% bonds on October 1, 2021. The face amount of the bonds was $105,000, while the issue price was $108,000. Interest is payable on April 1 of each year. The fiscal year of Cramer Company ends on December 31. How much interest expense will Cramer Company report in its December 31, 2021, income statement (assume straight-line amortization)? (Do not round intermediate calculations.)

Multiple Choice

• $1,575.

• $1,275.

• $1,425.

• $1,620.