On January 1 of Year 1, Drum Line Airways issued $2,500,000 of par value bonds for $2,260,000. The bonds pay interest semiannually on January 1 and July 1. The contract rate of interest is 5% while the market rate of interest for similar bonds is 6%. The bond premium or discount is being amortized at a rate of $8,000 every six months. The company's December 31, Year 1 balance sheet should reflect total liabilities associated with the bond issue in the amount of:

	$2,338,500.
	$2,724,000.
	$2,786,500.
	$2,213,500.
	$2,276,000.