A government entity issues 5,000,000 of 4%. 20-year term bonds at a price of 5,300,000 interest is paid semiannually. The effective yield is 3.77%.

How should the entity record the second semiannual interest payment?

A debit cash 200,000 credit bond interest expense 199806 credit bond premium 194

B debit cash 100,000 credit bond interest expense 99,903 credit bond premium 97

C debit bond interest expense 99,903 debit bond premium 97 credit cash 100,000

D debit bond interest expense 199,806 debit bond premium 194 credit cash 200,000