On 10/1/X1, Openshaw, Inc issued $1,000,000 of bonds at a price of 98. Assuming the bonds have a 3-year term and bear interest at an annual stated rate of 6% payable semi-annually.

What is the 12/31/X1 adjusting journal entry to record interest (using the straight line method?)

a.

Interest Expense $66,667

Interest Payable 60,000 Bond Premium 6,667

b.

Interest Expense $16,667 Interest Payable 15,000 Bond Discount 1,667

c.

Interest Expense $66,667 Interest Payable 60,000 Bond Discount 6,667

d.

Interest Expense $16,667 Interest Payable 15,000 Bond Premium 1,667

Group of answer choices

a

b

c

d