ANSWER
Cash interest received | 5,400 | =120,000*9%/2 |
Interest revenue for first interest payment | 4,305 | =123,000*7%/2 |
Premium amortized for first payment | 1,095 | |
Carrying value after first payment | 121,905 | =123,000-1,095 |
Interest revenue for second interest payment | 4,267 | =121,905*7%/2 |
Option A $4,267 is correct |
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