Texxon Corporation issued $500,000 of 8%, 10-year bonds. Interest is paid semiannually. Assume that the market rate for similar investments is 6 percent.

1. The journal entry that would be made when the first payment is made to the bondholders would include:

a. a debit to Cash for $20,000.00

b. a credit to Discount on Bonds Payable for $2,763.80

c. a debit to Interest Expense for $17,236.20

d. a debit to Bonds Payable for $20,000.00