C Company issued $750,000 of 4% bonds on October 1 for $691,100 to yield 5%. Interest is paid annually on October 1. The adjusting entry on December 31 shows

A debit to Discount on bonds payable for the difference between Interest expense and interest payable.

A credit to Cash for $750,000 x .04 x 3/12.

A debit to interest expense of $691,100 x .04 x 3/12.

A credit to Interest payable of $750,000 x .04 x 3/12.