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 to record the issue of these bonds would include:

a. a credit to cash for $500,000

b. a debit to Bonds Payable for $500,000

c. a credit to Premium on Bonds Payable for $74,540

d. a credit to Premium on Bonds Payable for $68,720