Which of the following is incorrect with regard to the Davis bonds when the straight-line method of amortization is utilized?

A) The market rate of interest exceeded the coupon rate of interest when the bonds were issued.
B) The semiannual interest expense is $1,095.
C) The book value of the bonds increases $45 every six months.
D) The semiannual interest expense is less than the semiannual cash interest payment.

When the straight-line method of amortization is used, the semiannual interest expense is the same amount for each period. In this case, it would be $1,050 ($30,000 bond x 7% coupon rate / 2 periods per year = $1,050). Since the semiannual cash interest payment is $1,050 ($30,000 bond x 7% coupon rate x 6/12 period = $1,050), the semiannual interest expense is equal to the semiannual cash interest payment, not less than it. Therefore, choice D is incorrect. Choices A, B, and C are all correct.