On January 1 of Year 1, Congo Express Airways issued $3,500,000 of 7% bonds that

pay interest semiannually on January 1 and July 1. The bond issue price is $3,197,389

and the market rate of interest for similar bonds is 8%. The bond premium or discount

is being amortized at a rate of $10,087 every six months. After accruing interest at year

end, the company's December 31, Year 1 balance sheet should reflect total liabilities

associated with the bond issue (including interest) in the amount of:

A) $3,340,063.

B) $3,217,563.

C) $3,780,000.

D) $3,902,500.

E) $3,782,437