On January 1, 2016, Tonika Company issued a four-year, $10,000, 7% bond. The interest is payable annually each December 31. The issue price was $9,668 based on an 8% effective interest rate. Tonika uses the effective-interest amortization method. Rounding calculations to the nearest whole dollar, which of the following journal entries correctly records the 2016 interest expense?
A. Interest expense 700
Cash 700
B. Interest expense 883
Discount on bonds payable 183
Cash 700
C. Interest expense 773
Discount on bonds payable 73
Cash 700
D. Interest expense 676
Discount on bonds payable 24
Cash 700
a. Option A
b. Option B
c. Option C
d. Option D
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