On July 1, 2019, The Boss Corporation purchased $100,000 of E Street Band Corp. bonds for $95,000. The 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 December 31 and June 30 of each year. The Boss Corporation accounts for the bonds as a held-to-maturity investment, and uses the effective interest method. The fair value of the bonds at December 31, 2019 is $107,000. In its 2019 income statement, The Boss Corporation would report:

A) No unrealized gain and interest income of $3,000.

B) No unrealized gain and interest income of $3,325.

C) No unrealized gain and interest income of $6,000.

D) An unrealized gain of $12,000 and interest income of $3,000.