On January 1,

2020,

Fergus

Corporation issued

$800,000,

10%,

5-year

bonds. The bond interest is payable on January 1 and July 1. The bonds sold for

$864,887.

The market rate of interest when the bonds were issued was

8%.

Under the effective-interest method, the interest expense for the six months ending July 1,

2020,

would be closest to

A.

$40,000.

B.

$32,000.

C.

$80,000.

D.

$34,595.