Pan Company received proceeds of $160,000 on 10-year, 8% bonds issued on January 1, 2013. The bonds had a face value of $198,000, pay interest semi-annually on June 30 and December 31. Pan uses the straight-line method of amortization. What is the amount of interest expense Pan will show with relation to these bonds for the year ended December 31, 2014?

Select one:

a. $15,840

b. $12,040

c. $13,940

d. $19,640