On January 1, Year 1, Hanover Corporation issued bonds with a $36,500 face value, a stated rate of interest of 7%, and a 5-year term to maturity. The bonds were issued at 98. Hanover uses the straight-line method to amortize bond discounts and premiums. Interest is payable in cash on December 31 each year.

The journal entry used to record the issuance of the bond and the receipt of cash would be: (Round your answer to the nearest whole dollar amount.)

Multiple Choice

• Cash	36,354
  Discount on Bonds Payable	146
  Bonds Payable		36,500

• Cash	36,500
  Discount on Bonds Payable		146
  Bonds Payable		36,354

• Cash	35,770
  Discount on Bonds Payable	730
  Bonds Payable		36,500

• Cash	36,500
  Bonds Payable		36,500

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