On January 1, 2020 Arawak Inc. issued $2,000,000 of 10-year, 9% bonds for $1,877,103. The bonds were issued when the market rate of interest was 10%. Interest is payable annually on December 31 each year. Arawak uses the effective-interest method of amortization. At the end of the first year, Arawak would report an unamortized bond discount of:

a. $115,187.

b. $102,897.

c. $104,126.

d. $91,836.