On January 1 2010, oriental Fragrances Company issues $1,000,000 face value, five-year bonds with annual interest payment of $62, 500 to be paid each December 31. The market interest rate is 6.0 percent. Using the effective interest rate method of amortization, Oriental Fragrances is most likely to record: A. An interest expense of $62, 500 on its 2010 income statement. B. A liability of $1, 010, 531 on December 31 2010 balance sheet. C. A liability of $1,008, 663 on December 31 2010 balance sheet. D. A $60, 632 cash outflow from operating activity on the 2010 statement of cash flows. E. A $60, 632 cash outflow from financing activity on the 2010 statement of cash flows