On April 1, Year 1, Greenway Corporation issues $20 million of 10%, 20-year bonds payable at par. Interest on the bonds is payable semiannually each April 1 and October 1.

Refer to the information above. The adjusting entry (if any) required on December 31, Year 1, related to this bond issue involves: Recognition of interest expense of $1,000,000.

A credit to Interest Payable of $2,000,000.

A credit to Cash of $500,000.

Recognition of interest expense of $500,000.