On January 1, a company issues bonds dated January 1 with a par value of $350,000. The bonds mature in 5 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The market rate is 6% and the bonds are sold for $364,930. The journal entry to record the first interest payment using straight-line amortization is:

Debit Bond Interest Expense $13,743.00; credit Discount on Bonds Payable $1,493.00; credit Cash $12,250.00.

Debit Bond Interest Expense $10,757.00; debit Discount on Bonds Payable $1,493.00; credit Cash $12,250.00.

Debit Bond Interest Expense $10,757.00; debit Premium on Bonds Payable $1,493.00; credit Cash $12,250.00.

Debit Bond Interest Expense $13,743.00; credit Premium on Bonds Payable $1,493.00; credit Cash $12,250.00.

Debit Interest Payable $12,250.00; credit Cash $12,250.00.