Answer

Correct answer is b.$914

When bond is issued on yield to market at price of $10,179, interest is charged on outstanding amount of $10,179 @ of 9%.

So interest charged on June 30 is @9% for 6 months on $10,179

Interest expense=$10,179*9%*6/12

Interest expense for 6 months =$458

Cash paid for interest is however at stated interest rate of 10% on $10,000 for 6 months=$10,000*10%*6/12

Cash paid=$500

Difference of interest paid and interest expense is debited to bonds payable balance so bonds payable balance outstanding is reduced.

Bonds payable outstanding reduced=$500-$458

=$42

Bonds payable outstanding balance as on june 30=$10,179-$42

=$10,137

Now interest for last 6 months in 2019 is charged on $10,137 @9%

Interest expense from June 30 to December 31=$10,137*9%*6/12

Interest expense=$456

Total interest expense for 2019=$456+458

=$914

So,total interest expense charged for 2019=$914