A company issues bonds with a $100,000 par value, an 8% annual contract rate, semiannual interest payments, and a five year life. The bonds sold for $107,850. The entry to record the issuance of the bonds will include:
A. A credit to Cash of $100,000.
B. A credit to Premium on Bonds Payable of $7,850.
C. A debit to Discount on Bonds Payable of $7,850.
D. A debit to Interest Expense of $7,850.
E. A credit to Bonds Payable of $107,850.
Answer: B
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