D E F 8 9 1 Problem 17 [discount, inverted] 2 On June 30, 2020 ABC purchased $500,000 par value bonds dated June 30, 2020 at a purchase price of 3 $478,674. The coupon rate on the bonds is _% per year and the purchase price of the bonds yield an 4 effective rate of % per year. The bonds pay interest semiannually on June 30 and December 31" and 5 mature on June 30, 2025. The fiscal year of ABC ends on December 31st. The fair market value of the 6 bonds on December 31, 2020 was _. ABC received the December 31 interest payment on December 31, 7 2020. ABC classifies the bonds as Available-For-Sale. Any end-of-year difference between market value and amortized cost of the bond is deemed temporary 10 After all adjusting entries were made at December 31, 2020, the amortized cost of the bond was 11 $480,535, the amount of interest revenue recognized for the period June 30, 2020-December 31,2020 was 12 $14,360, and the balance in the fair value adjustment account was a debit of $20,000. 13 All questions below pertain to the accounting for the investment by ABC. 14 15 16 1. What must have been the coupon rate? 17 Enter your answer in the green box (enter fractional value and not percentage: 0.8.07 not 7%) 19 20 2. What must have been the effective rate? 21 22 Enter your answer in the green box (enter fractional value and not percentage; e.K.07, not 7%) 23 24 25 3. What must have been the fair market value of the bonds on December 31, 20207 26 27 Enter your answer in the green box 28 29 30 2 3 31