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:
A. $396,400.
B. $399,800.
C. $400,000.
D. $395,800.
E. $396,200.
Answer: A
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