On January 1, a company issues bonds dated January 1 with a par value of $410,000. 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 $394,914. The journal entry to record the issuance of the bond is:

Multiple Choice

a. Debit Cash $394,914; debit Discount on Bonds Payable $15,086; credit Bonds Payable $410,000.

b. Debit Cash $394,914; debit Premium on Bonds Payable $15,086; credit Bonds Payable $410,000.

c. Debit Bonds Payable $410,000; debit Bond Interest Expense $15,086; credit Cash $425,086.

d. Debit Cash $394,914; credit Bonds Payable $394,914.

e. Debit Cash $410,000; credit Discount on Bonds Payable $15,086; credit Bonds Payable $394,914.