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On January 1, 2019, Agree Company issued $85,000 of five-year, 8% bonds when the market interest rate was 12%. The issue price of the bonds was...

On January​ 1, 2019, Agree Company issued​ $85,000 of​ five-year, 8% bonds when the market interest rate was​ 12%. The issue price of the bonds was​ $62,401. Agree uses the​ effective-interest method of amortization for bond discount. Semiannual interest payments are made on June 30 and December 31 of each year. Which of the following is the correct journal entry to record the first interest​ payment? (Round all amounts to the nearest whole​ dollar.)


A.

Interest Expense

​3,400

Discount on Bonds Payable

​1,700

       Cash

​5,100

B.

Interest Expense

​5,100

     Cash

​5,100

C.

Interest Expense

​5,100

        Discount on Bonds Payable

​3,400

       Cash

​1,700

D.

Interest Expense

​3,744

       Discount on Bonds Payable

    344

       Cash

​3,400

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