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Paterson Company purchased $600,000 of 10% bonds of Allen Co. on January 1, 2013, paying $564,150. The bonds mature January 1, 2023; interest is payable each July 1 and January 1. The discount of $35,850 provides an effective yield of 11%. Paterson Company uses the effective-interest method and plans to hold these bonds to maturity. On July 1, 2013, Paterson Company should increase its Debt Investments account for the Allen Co. bonds by:

a) $3,588

b) $2,056

c) $1,794

d) $1,028

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