On January 1, Year 1 Residence Company issued bonds with a $50,000 face value. The bonds were issued at 104 resulting in a 4% premium. They had a 20 year term and a stated rate of interest of 7% payable in cash on December 31 of each year. The company amortizes the premium on a straight-line basis. Assuming a straight line amortization of the premium, the journal entry necessary to recognize interest expense on the December 31, Year 1 is Account Titles Debit Credit 3,300 100 Interest Expense Premium on Bonds Payable Cash 3,400 Account Titles Debit 3,600 Credit Interest Expense Premium on Bonds Payable Cash 100 3,500 Account Titles Debit Credit Interest Expense Premium on Bonds Pavable 3,400 100 Cash 3,500 Account Titles Debit 3,400 Credit Interest Expense Cash 3,400