Nugent Corporation purchased $30,000 of Rylander Company's 8% bonds on July 1, 2020 at par. The bonds mature on June 30, 2025. Nugent classifies the investment as a held-to-maturity security. However, on July 1, 2020, Nugent chooses to account for the investment using the fair value option. If the fair value of the Rylander bonds is $31,200 on December 31, 2020, what will be recorded in the adjusting entry made by Nugent Corporation?

Group of answer choices

Unrealized gain $31,200 Reported in Net Income

None of these is correct.

Unrealized loss $31,200 Reported in Other Comprehensive Income

Unrealized gain of $1,200 Reported in Other Comprehensive Income

Unrealized gain $1,200 Reported in Net Income