On January 1, 2018, 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, 2018 journal entry to record the second period of interest, Rupar would record a credit to interest revenue of:
A) $3,336.
B) $3,325.
C) $3,000.
D) $3,500.
Correct Answer:
Verified
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