A company issued five-year, 7% bonds with a par value of $175,000. The market rate when the bonds were issued was 6.5%. The company received $198,975 cash for the bonds. Using the straight-line method, the amount of recorded interest expense for the first semiannual interest period is:
$6,125.00
$3,727.50
$13,928.25
$12,250.00
$6,964.12