On January 1, a company issued and sold a $407,000, 8%, 10-year bond payable, and received proceeds of $402,000. 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 $16,530; credit Cash $16,280; credit Discount on Bonds Payable $250.

• Debit Bond Interest Expense $32,560; credit Cash $32,560.

• Debit Bond Interest Expense $16,030; debit Discount on Bonds Payable $250; credit Cash $16,280.

• Debit Bond Interest Expense $16,280; debit Discount on Bonds Payable $250; credit Cash $16,530.

• Debit Bond Interest Expense $16,280; credit Cash $16,280.