Grant Corp. has elected to use the fair value option for long-term notes it issues to finance portions of its business. At December 31, 2020 the unadjusted carrying value of Grant Corp's long-term notes payable was $375,000. The fair value of the notes was $405,000. The difference was due to chantges in market interest rates, not credit risk. Which of the following is the correct journal entry to adjust the notes to fair value?

Debit Retained Earnings $30,000; Credit Notes Payable $30,000

Debit Unrealized Holding Loss - Other Comprehensive Income $30,000; Credit Notes Payable $30,000

Debit Unrealized Holding Loss - Income $30,000; Credit Notes Payable $30,000

Debit Notes Payable $30,000; Credit Unrealized Holding Gain - Income $30,000