Grandee Company Sells $200,000 of 13% Bonds Dated January 1

Multiple Choice

Grandee Company sells $200,000 of 13% bonds dated January 1, 2013, on that date, for $204,650.74 to yield 12%. The bonds pay interest annually on December 31, and bonds of $40,000 mature on each December 31 for the next 5 years. Grandee uses the effective interest method of amortization. The entry to record the issuance would include a

A) a debit to bonds payable for $200,000
B) a debit to cash for $200,000
C) a debit to cash for $204,650.74
D) a credit to bonds payable for $204,650.74