URGENT:

2. On January 1, 2016, Tonika Company issued a four-year, $10,000, 6% bond. The interest is payable annually each December 31. The issue price was $9,661 based on an 7% effective interest rate. Tonika uses the effective-interest amortization method.

   The interest expense on the income statement for the year ended December 31, 2016 is closest to:

   1. 690

   2. 686

   3. 676

   4. 650