On January 1, a company issued and sold a $411,000, 7%, 10-year bond payable, and received proceeds of $406,000. 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:

Debit Bond Interest Expense $14,135; debit Discount on Bonds Payable $250; credit Cash $14,385.

Debit Bond Interest Expense $14,385; credit Cash $14,385.

Debit Bond Interest Expense $14,635; credit Cash $14,385; credit Discount on Bonds Payable $250.

Debit Bond Interest Expense $14,385; debit Discount on Bonds Payable $250; credit Cash $14,635.

Debit Bond Interest Expense $28,770; credit Cash $28,770.