I took two flights, each trying to use a “500” foot increment.
One at 7500 and one later at 12500.
The sim took the altitude mentioned above in the Nav Log, and displayed it properly on the Nav Log Altitude Graph after I clicked the graph.
In both cases, ATC (as it should) rounded it off to the next highest thousand foot level, 7500 got me cleared to 8000, and 12500 got me cleared to 13000.
So, as far as I can see, the sim does work correctly.