On January 1 of Year 1, Congo Express Airways issued $3,770,000 of 7% bonds that pay interest semiannually on January 1 and July 1. The bond issue price is $3,440,000 and the market rate of interest for similar bonds is 8%. The bond premium or discount is being amortized at a rate of $11,000 every six months.

The amount of interest expense recognized by Congo Express Airways on the bond issue in Year 1 would be:

$285,900.

$263,900.

$241,900.

$142,950.

$301,600.