On January 1, a company issues bonds dated January 1 with a par value of $370,000. The bonds mature in 5 years. The contract rate is 11%, and interest is paid semiannually on June 30 and December 31. The market rate is 12% and the bonds are sold for $356,386. The journal entry to record the first interest payment using the effective interest method of amortization is:
a. Debit interest Expense $19.317, debit Discount on Bonds Payable $1,033, cred Cash $20.350
b. Debit interest Expense $21.383; credt Discount on Bonds Payable $1,033; credit Cash $20.350.
c. Debit Interest Expense $19,317, debit Premium on Bonds Payable $1033; credit Cash $20,350
d. Debit interest Payable $20,350 credit Cash $20.350
