On January 1, a company issues bonds dated January 1 with a par value of $770,000. 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 $761,000. The journal entry to record the first interest payment using straight-line amortization is:

Multiple Choice

• Debit Interest Payable $30,800; credit Cash $30,800.

• Debit Interest Expense $30,800; credit Cash $30,800.

• Debit Interest Expense $32,300; credit Discount on Bonds Payable $1,500; credit Cash $30,800.

• Debit Interest Expense $29,300; debit Discount on Bonds Payable $1,500; credit Cash $30,800.

• Debit Interest Expense $30,800; credit Premium on Bonds Payable $1,500; credit Cash $29,300.