EKM, Inc issued 8%, 3-year bonds with a par value of $250,000 that pay interest semiannually. The bond was issued at market rate. The journal entry to record each semiannual interest payment is:

		Debit Bond Interest Expense $10,000; credit Cash $10,000.
		Debit Bond Interest Expense $20,000; credit Cash $20,000.
		Debit Cash $20,000; credit Bond Interest Expense $20,000.
		Debit Bond Interest Payable $25,000; credit Cash $25,000.
		No entry is needed, since no interest is paid until the bond is due.