On January 1, your company issues a 5-year bond with a face value of $10,000 and a stated interest rate of 7%. The market interest rate is 5%. The issue price of the bond was $10,866. Your company used the effective-interest method of amortization. At the end of the first year, your company should: Multiple Choice

debit Interest Expense for $700, debit Premium on Bonds Payable for $157.00, and credit Interest Payable for $543.00.

debit Interest Expense for $543.00 and credit Interest Payable for $543.00.

debit Interest Expense for $700, credit Premium on Bonds Payable for $157.00, and credit Interest Payable for $543.00.

debit Interest Expense for $543.00, debit Premium on Bonds Payable for $157.00, and credit Cash for $700.