On January 1, a company issued and sold a $400,000, 7%, 10-year bond payable, and received proceeds of $396,000. Interest is payable each June 30 and December 31. The company uses the straight-line method to amortize the discount. The carrying value of the bonds immediately after the second interest payment is:

Select one:

a. $400,000.

b. $399,800.

c. $396,400.

d. $395,800.

e. $396,200.