On January 1, a company issued and sold a $391,000, 7%, 10-year bond payable, and received proceeds of $386,000. 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:

Multiple Choice

• Debit Bond Interest Expense $13,435; debit Discount on Bonds Payable $250; credit Cash $13,685.

• Debit Bond Interest Expense $27,370; credit Cash $27,370.

• Debit Bond Interest Expense $13,935; credit Cash $13,685; credit Discount on Bonds Payable $250.

• Debit Bond Interest Expense $13,685; debit Discount on Bonds Payable $250; credit Cash $13,935.

• Debit Bond Interest Expense $13,685; credit Cash $13,685.