On January 1,2010,Lane Issues $700,000 of 7%,15-Year Bonds at a Price

Multiple Choice

On January 1,2010,Lane issues $700,000 of 7%,15-year bonds at a price of 106 3/4.The interest payments are made on June 30 and December 31.Lane elects a fiscal year ending September 30.What is the appropriate adjusting journal entry required for September 30,2010?

A)
$\begin{array}{|c|r|r|}\hline \text { Interest Expense } & 22,925 & \\\hline \text { Cash } & & 22,925 \\\hline\end{array}$

B)
$$\begin{array} { | l | r | r | } \hline \text { Interest Expense } & 22,925 & \\\hline \text { Premium on Bonds Payable } & 1,575 & \\\hline \text { Cash } & & 24,500 \\\hline\end{array}$$
C)
$$\begin{array} { | l| r | r | } \hline \text { Interest Expense } & 11,462 & \\\hline \text { Premium on Bonds Payable } & 788 & \\\hline \text { Interest Payable } & & 12,250 \\\hline\end{array}$$
D)
$$\begin{array} { | l | r | r | } \hline \text { Interest Payable } & 11,462 & \\\hline \text { Premium on Bonds Payable } & 788 & \\\hline \text { Cash } & & 12,250 \\\hline\end{array}$$
E)
$$\begin{array} { | l | r | r | } \hline \text { Interest Payable } & 11,462 & \\\hline \text { Discount on Bond Payable } & 788 & \\\hline \text { Interest Expense } & & 12,250 \\\hline\end{array}$$