Golden Company received proceeds of $94,250 on 10-year, 8% bonds issued on January 1, 2006. The bonds had a face value of $100,000, pay interest annually on December 31st, and have a call price of 101. Golden uses the straight-line method of amortization.
What is the amount of interest expense Golden will show with relation to these bonds for the year ended December 31, 2007?
a. $8,000
b. $7,540
c. $8,575
d. $7,425