Use the following to answer questions 5 and 6:

On January 1, 2021, Nevada Corporation issued 8% bonds with a face value of $10,000,000. The bonds sold for $11,487,747. They mature in ten years and pay interest semiannually on June 30th and December 31st. The market rate of interest at the time the bonds were issued was 6%. Nevada uses the effective interest method for amortizing bond discounts and premiums.

_____ 5. Total interest expense Nevada would report on its income statement for the year ended December 31, 2021 relative to these bonds is closest to:

A)

$800,000

B)

$600,000

C)

$689,265

D)

$687,603

_____ 6. Total interest paid by Nevada on these bonds for the year ended December 31, 2021 is closest to:

A)

$800,000

B)

$600,000

C)

$689,265

D)

$687,603