On January 1, a company issues bonds dated January 1 with a par value of $340,000. The bonds mature in 5 years. The contract rate is 11%, and interest is paid semiannually on June 30 and December 31. The market rate is 10% and the bonds are sold for $353,122. The journal entry to record the first interest payment using the effective interest method of amortization is: (Rounded to the nearest dollar.)

Multiple Choice

Debit Bond Interest Expense $17,388; debit Premium on Bonds Payable $1,312; credit Cash $18,700.

Debit Bond Interest Expense 20,012; credit Premium on Bonds Payable $1,312; credit Cash $18,700.

Debit Bond Interest Expense $17,656; debit Discount on Bonds Payable $1,044; credit Cash $18,700.

Debit Bond Interest Expense $17,656; debit Premium on Bonds Payable $1,044; credit Cash $18,700.

Debit Interest Payable $18,700; credit Cash $18,700.