On January $1,$ Year $1,$ Jones Company issued bonds with a $$200,000$ face value, a stated rate of interest of $7\mathrm{.}5\%,$ and a $5-$year term to maturity. The bonds

were issued at $97.$ Interest is payable in cash on December $31$st of each year. The company amortizes bond discounts and premiums using the straight$-$

line method.

What is the amount of interest expense shown on Jones' income statement for the year ending December $31,$ Year $1?$

Multiple Choice

$$13,800$

$$16,200$

$$15,000$

$$21,000$

On January $1,$ Year $1,$ Pierce Corporation issued $$25,000$ in $8\%,5-$year bonds payable at $102.$ Interest payments are due each December $31.$ Pierce uses

the straight$-$line method to amortize bond discounts and premiums.

Which of the following shows the effect of the bond issuance on January $1,$ Year $1?$

Multiple Choice

Option A

Option C