On January 1, 2013, Rupar Retailers purchased $100,000 of Anand Company bonds at a discount of $5,000. The Anand bonds pay 6% interest but were purchased when the market interest rate was 7% for bonds of similar risk and maturity. The bonds pay interest semiannually on January 1 and July 1 of each year. Rupar accounts for the bonds as a held-to-maturity investment, and uses the effective interest method. In Rupar's December 31, 2013, journal entry to record the second period of interest, Rupar would record a credit to interest revenue of:

Question

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The effective interest method calculates interest revenue based on the carrying amount of the bond and the market interest rate at the time of purchase. The carrying amount at the start is $95,000 ($100,000 - $5,000 discount). For the second period, the interest revenue is $95,665 (carrying amount after first period) multiplied by 7% annual market rate divided by 2 (for semiannual), which equals $3,336.

On January 1, 2013, Rupar Retailers Purchased $100,000 of Anand