Patton Company purchased $900,000 of 10% bonds of Scott Company on January 1, 2015, paying $846,225. The

Question:

Patton Company purchased $900,000 of 10% bonds of Scott Company on January 1, 2015, paying $846,225. The bonds mature January 1, 2025; interest is payable each July 1 and January 1. The discount of $53,775 provides an effective yield of 11%. Patton Company uses the effective-interest method and plans to hold these bonds to maturity.
On July 1, 2015, Patton Company should increase its Debt Investments account for the Scott Company bonds by
A. $5,382.
B. $3,084.
C. $2,691.
D. $1,542.
D. $1,542.