Merchant Company issued 10-year bonds on January 1. The 7% bonds have a face value of $720,000 and pay interest every January 1 and July 1. The bonds were sold for $598,399 based on the market interest rate of 8%. Merchant uses the effective interest rate method to amortize bond discounts and premiums. On July 1 of the first year, Merchant should record interest expense (rounded to the nearest dollar) of Oa. $28,800 Ob. $23,936 Oc. $20,944 Od. $25,200