On January 1, 2021, Orange Corporation issues $700,000, 5-year, 8% bonds at 105. Interest is paid semiannually on January 1 and July 1. Orange Corporation uses the straight-line method of amortization. The company's fiscal year ends on December 31. The necessary entry on July 1, 2021 includes:

A.a credit to Premium on Bonds Payable of $3,500.

B.a debit to Interest Expense of $28,000

C.a credit to Cash of $28,000.

D.to Discount on Bonds Payable of $3,500.