On January 1, a company issues bonds dated January 1 with a par value of $710,000. The bonds mature in 3 years. The contract rate is 8%, and interest is paid semiannually on June 30 and December 31. The bonds are sold for $698,000. The journal entry to record the first interest payment using straight-line amortization is:

Multiple Choice

Debit Interest Expense $30,400; credit Discount on Bonds Payable $2,000; credit Cash $28,400.

Debit Interest Expense $28,400; credit Premium on Bonds Payable $2,000; credit Cash $26,400.

Debit Interest Expense $28,400; credit Cash $28,400.

Debit Interest Payable $28,400; credit Cash $28,400.

Debit Interest Expense $26,400; debit Discount on Bonds Payable $2,000; credit Cash $28,400.