On the first day of the fiscal year, Lisbon Co. issued $1,000,000 of 10-year, 7% bonds for $1,050,000, with interest payable semiannually. Orange Inc. purchased the bonds on the issue date for the issue price. The journal entry to record the amortization of the premium (by the straight line method) for the year by Lisbon Co. includes a debit to:

a. Premium on Bonds Payable for $2,500.

b. Interest Expense for $5,000.

c. Interest Expense for $2,500.

d. Premium on Bonds Payable for $5,000.