Melina purchased a $10,000 corporate bond on July 1, 2017. The bond has a stated interest rate of 5%, payable annually on November 1. Since Melina purchased the bond between interest payment dates, how does she report the interest income on Schedule B, Interest and Ordinary Dividends? *

	She reports $251, the amount of interest earned from July 1 through December 31.
	She reports $332, her proportionate share of the interest as taxable income. No further adjustment is necessary.
	She reports $500, the full interest payment, then subtracts $332, the amount of accrued interest, as an adjustment.
	She reports $500, the entire interest payment. No further adjustment is necessary, as the amount of accrued interest was added to Melina's basis at the time of purchase.