On January 1, 2010, 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, 2010, 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. Lane elects a fiscal year ending September 30. What is the appropriate adjusting journal entry required for September 30, 2010?

A) $\begin{array} { | c | r | r | } \hline \text { Interest Expense } & 22,925 & \\\hline \text { Cash } & & 22,925 \\\hline\end{array}$
B) $\begin{array} { | c | r | r | } \hline \text { Interest Expense } & 22,925 & \\\hline \text { Premium on Bonds Payable } & 1,575 & \\\hline \text { Cash } & & 24,500 \\\hline\end{array}$
C) $\begin{array} { | l | r | r | } \hline \text { Interest Expense } & 11,462 & \\\hline \text { Premium on Bonds Payable } & 788 & \\\hline \text { Interest Payable } & & 12,250 \\\hline\end{array}$
D) $\begin{array} { | c | r | r | } \hline \text { Interest Payable } & 11,462 & \\\hline \text { Premium on Bonds Payable } & 788 & \\\hline \text { Cash } & & 12,250 \\\hline\end{array}$
E) $\begin{array} { | l | r | r | } \hline \text { Interest Payable } & 11,462 & \\\hline \text { Discount on Bond Payable } & 788 & \\\hline \text { Interest Expense } & & 12,250 \\\hline\end{array}$