Trego Company issued, payable on December 31, 2011, $1,000,000 face value, 4%, 5-year bonds. Interest will be paid semiannually each June 30 and December 31. The bonds sold at a price of 102; Trego uses the straight-line method of amortizing bond discount or premium.
The amount of bond interest expense recognized by Trego Company in 2012 with respect to these bonds is:
a. $40,000
b. $42,000
c. $60,000
d. $44,000