On January 1, a company issues bonds dated January 1 with a par value of $600,000. The bonds mature in 5 years. The contract rate is 10%, and interest is paid semiannually on June 30 and December 31. The market rate is 11% and the bonds are sold for $577,368. The journal entry to record the second interest payment using the effective interest method of amortization is:

A. Debit interest Expense $31,851.78; credit discount on Bonds Payable $1,851.78; credit cash $30,000

B. Debit interest Payable $30,000; credit cash $30,000

C. Debit interest Expense $28,244 .76; debit premium on bonds payable $1,755.24; credit cash $30,000

D. Debit Interest Expense $31,755.24; credit Discounts on Bonds Payable $1,755.24; credit cash $30,000