On January 1, 20x1, Cat Co. issued $1 million par value bonds at 104. The bonds have a coupon rate of 8% (payable June 30 and December 31) and mature in 10 years. Bond issue costs of $5,000 were incurred on the sale Under the FASB's preferred effective interest method for all amortization, Interest expense on June 30, 20x1 would be $39.116 $38.754 O$38,616 O$38.866