On January 1, Year 1, Gibson Corporation purchased bonds issued by Williamson Company. These bonds were classified asheld-to-maturity securities. The face value of these bonds is$200,000, pay 8% interest and were purchased to yield 6%. The bonds mature in 10 years and pay interest on an annual basis. If Gibson Corporation paid $229,439 for these bonds, how much interest revenue should it report on the bonds at December 31, Year 1? Assume that Gibson used the effective interest method.
A. $20,000
B. $12,000
C. $13,766
D. $16,000
