Sophie Company issued bonds with a contract rate of 8% and a face amount of $7,500 on January 1 of Year 1. The bonds mature in 25 years. The market interest rate for bonds with the same degree of riskiness is 14% compounded annually. Interest payments are made annually on December 31. The journal entry to record the first interest payment includes:

Debit to Cash of $7,500

Debit to Cash of $600

Debit to Discount on Bonds of $617

Debit to Discount on Bonds of $17

Credit to Premium on Bonds of $17

Debit to Interest Expense of $617