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On January 1 , the corporation issued $1,000,000,10 year, 8% bonds at $1,058,000 with interest payable semi-annually on July 1 and January 1 . The effective interest rate is 7%. Using the effective interest method of amortization, which of the following debits and credits would the first interest payment include on July 1 ? debit cash $35.000 and credit to premium on bonds payable of $5,000. debit bond interest expense $37,030 and a credit to cash $40,000. None of the answers are correct. credit to premium on bonds payable of $2.970 and credit of cash of $40.000