The Merchant Company issued 10-year bonds on January 1, 2009. The 15% bonds have a face value of $100,000 and pay interest every January 1 and July 1. The bonds were sold for $117,205 based on the market interest rate of 12%. Merchant uses the effective-interest method to amortize bond discounts and premiums. On July 1, 2009, Merchant should record interest expense (round to the nearest dollar) of

$7,032

$7,500

$8,790

$14,065