On January 1, 2013, Lane Issues $700,000 of 7%, 15-Year $\begin{array}{|c|r|r|}\hline \text { Interest Expense } & 22,925 & \\\hline \text { Cash } & & 22,925 \\\hline\end{array}$

On January 1, 2013, 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. The straight-line method is used to amortize any bond discount or premium. Lane elects a fiscal year ending September 30. What is the appropriate adjusting journal entry required for September 30, 2013?

A) $\begin{array}{|c|r|r|}\hline \text { Interest Expense } & 22,925 & \\\hline \text { Cash } & & 22,925 \\\hline\end{array}$
B) $\begin{array}{|l|r|l|}\hline \text { Interest Expense } & 22,925 & \\\hline \text { Premium on Bonds Payable } & 1,575 & \\\hline \text { Cash } & & 24,500 \\\hline\end{array}$
C) $\begin{array}{|l|r|l|}\hline \text { Interest Expense } & 11,462.50 & \\\hline \text { Premium on Bonds Payable } & 787.50 & \\\hline \text { Interest Payable } & & 12,250 \\\hline\end{array}$
D) $\begin{array}{|l|r|l|}\hline \text { Interest Payable } & 11,462.50 & \\\hline \text { Premium on Bonds Payable } & 787.50 & \\\hline \text { Cash } & & 12,250 \\\hline\end{array}$
E) $\begin{array}{|l|r|l|}\hline \text { Interest Payable } & 11,462.50 & \\\hline \text { Discount on Bond Payable } & 787.50 & \\\hline \text { Interest Expense } & & 12,250 \\\hline\end{array}$