Sail and Sink Inc. issues $425,000 of 6%, 5-year bonds for cash proceeds of $390,529. The market interest rate is 8%. Interest is paid semi-annually.

9. To the nearest dollar, how much bond interest expense is recorded on the first interest date?

(a) $12,750

(b) $15,621

(c) $17,000

(d) $2,871

10. To the nearest dollar, what is the carrying amount of the bonds after the first interest payment?

(a) $395,600

(b) $ 387,658

(c) $ 393,400

(d) $ 425,000

11. What is the total interest cost over the life of the bonds?

(a) $127,500

(b) $34,471

(c) $ 255,000

(d) $161,971