Question: On December 31, 2010, a company issues 16%, 10-year bonds with a par value of $100,000. Interest is paid on June 30 and December 31. The bonds are sold to yield a 14% annual market rate at an issue price of $110,592. Using the straight-line method to allocate bond interest expense, the issuer records the second interest payment (on December 31, 2011) with a debit to Premium on Bonds Payable in the amount of
(a) $7,470,
(b) $530,
(c) $8,000, or
(d) $400.