On January 1, Nicholas Corporation issued $1,000,000, 14%, 5-year bonds with interest payable on December31.

The bonds sold for $1,072,096. The market rate of interest for these bonds was 12%. On the first interest date, using the effective-interest method, the debit entry to Interest Expense is for:

(a) $120,000.

(c) $128,652.

(b) $125,581.

(d) $140,000.