On January 1, a company issues bonds dated January 1 with a par value of $200,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 6% and the bonds are sold for $208,531. The journal entry to record the issuance of the bond is:

Multiple Choice:

• Debit Cash $200,000; debit Premium on Bonds Payable $8,531; credit Bonds Payable $208,531.

• Debit Bonds Payable $200,000; debit Bond Interest Expense $8,531; credit Cash $208,531.

• Debit Cash $208,531; credit Bonds Payable $208,531.

• Debit Cash $208,531; credit Premium on Bonds Payable $8,531; credit Bonds Payable $200,000.

• Debit Cash $208,531; credit Discount on Bonds Payable $8,531; credit Bonds Payable $200,000.