On January 1, Parson Freight Company issues 7.5%, 10-year bonds with a par value of $2,600,000. The bonds pay interest semiannually. The market rate of interest is 8.5% and the bond selling price was $2,427,173. The bond issuance should be recorded as:

Multiple Choice

• Debit Cash $2,427,173; debit Discount on Bonds Payable $172,827; credit Bonds Payable $2,600,000.

• Debit Cash $2,600,000; credit Bonds Payable $2,427,173; credit Discount on Bonds Payable $172,827.

• Debit Cash $2,427,173; credit Bonds Payable $2,427,173.

• Debit Cash $2,427,173; debit Interest Expense $172,827; credit Bonds Payable $2,600,000.

• Debit Cash $2,600,000; credit Bonds Payable $2,600,000.