On January 1, 2013, a company issued and sold a $400,000, 7%, 10-year bond payable and received proceeds of $396,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The journal entry to record the first interest payment is: 14,000 1) Bond Interest Expense Cash 14,000 28,000 2) Bond Interest Expense Cash 28,000 3) 14,200 Bond Interest Expense Cash Discount on Bonds Payable 14,000 200 4) Bond Interest Expense Discount on Bonds Payable Cash 13,800 200 14,000 5) Bond Interest Expense Discount on Bonds Payable Cash 14.000 200 14,200