On January 1, 2014, Tonika Corporation 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. Assuming the effective-interest amortization is used, and rounding calculations to the nearest whole dollar, which of the following journal entries correctly records the 2014 interest expense? 
Definitions:
Actual Output
Actual output refers to the total amount of products or services produced by a company or sector in a given period.
Variable Manufacturing Overhead
Costs in the production process that fluctuate with the volume of production, such as utilities for the machinery.
Direct Labour Hours
The total hours worked by employees that are directly involved in the manufacturing or production process.
Standard Cost
Standard cost refers to the predetermined cost of manufacturing a single unit or a number of units of product under current or anticipated operating conditions.
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