On January 1, a company issues bonds dated January 1 with a par value of $300,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The market rate is 10% and the bonds are sold for $288,413. The journal entry to record the first interest payment using the effective interest method of amortization is:

A) Debit Interest Expense $12,579; debit Discount on Bonds Payable $921; credit Cash $13,500.

B) Debit Interest Expense $12,579; debit Premium on Bonds Payable $921; credit Cash $13,500.

C) Debit Interest Expense $14,421; credit Discount on Bonds Payable $921; credit Cash $13,500.

D) Debit Interest Expense $14,421; credit Premium on Bonds Payable $921; credit Cash $13,500.

E) Debit Interest Payable $13,500; credit Cash $13,500.