On January 1, a company issues bonds dated January 1 with a par value of $460,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 8% and the bonds are sold for $441,361. The journal entry to record the first interest payment using straight-line amortization is:
(A) debit Interest Expense $17,963.90; credit Premium on Bonds Payable $1,863.90; credit Cash $16,100.00.
(B) debit Interest Expense $16,100.00; credit Cash $16,100.00.
(C) debit Interest Payable $16,100.00; credit Cash $16,100.00.
(D) debit Interest Expense $14,236.10; debit Discount on Bonds Payable $1,863.90; credit Cash $16,100.00.
(E) debit Interest Expense $17,963.90; credit Discount on Bonds Payable $1,863.90; credit Cash $16,100.00.