$40.$ On January $1,$ Year $1,$ Residence Company issued bonds with a $$62,000$ face value. The bonds were issued at $104$ resulting in a $4\%$ premium. They had a $20-$year term and a stated rate of interest of $7\%,$ which is paid at the end of each year. The company amortizes the premium on a straight$-$line basis. Which of the following shows how the recognition of interest expense will affect Residence's financial statements on December $31,$ Year $1?$Balance SheetAssets $=$ Carrying Value $+$ EquityIncome StatementRevenues $-$ Expenses $=$ Net IncomeStatement of Cash FlowsBond Liability$$(4,216)$$$(4,340)$$$(4,340)$$$(4,216)$A$)$B$)$C$)$D$)=$NA$$(124)==$NA$$124++++$ $$(4,216)$$$(4,216)$$$(4,340)$$$(4,340)$NA NA NA NA$$4,216=$$$(4,216)$$$4,216$$$(4,216)$$$4,340$$$(4,340)$$$4,216$$$(4,216)$$$(4,216)$ OA$$(4,340)$ OA$$(4,340)$ OA$$(4,216)$ OAOption A Option BOption COption D