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Cramer Company sold five-year, 9% bonds on October 1, 2021. The face amount of the bonds was $120,000, while the issue price was $126,000. Interest is payable on April 1 of each year. The fiscal year of Cramer Company ends on December 31. How much interest expense will Cramer Company report in its December 31, 2021, income statement (assume straight-line amortization)?
a. $2,000.
b. $1,900.
c. $1,778.
d. $2,040.
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