The Collins Company sold $200,000 of 10-year bonds for $190,000. The face rate on the bonds was 8% and interest is paid annually on December 31. What entry would be made on December 31 when the interest is paid?

a.

Interest Expense

Cash

b.

Interest Expense

Discount on Bonds Payable

Cash

c.

Interest Expense

Discount on Bonds Payable

Cash

d.

Interest Expense

Bonds Payable

Cash