A corporation issues $400,000, 8%, 5-year bonds on January 1, 2012, for $416,800. Interest is paid annually on January 1. If the corporation uses the straight-line method of amortization of bond premium, the amount of bond interest expense to be recognized in December 31, 2012's adjusting entry is 1) $35,360. 2) $32,000. 3) $28,640. 4) $3,360.