On July 1, 2010, Navarre Corporation issued bonds with a face value of $100,000 and 12% interest payable semiannually. The bonds mature on June 30, 2015. The market rate of interest at the time of issuance was 14%, so the bonds were issued at a discount of $7,054. Using the effective interest method, the amount of discount that should be amortized by Navarre on December 31, 2010, is:
Select one:
a. $493.75
b. $506.26
c. $423.21
d. $702.35