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Edama Company purchased $400,000 of 10% bonds of Loris Co. on January 1, 2022, paying $376,100. The bonds mature January 1, 2032; interest is
Edama Company purchased $400,000 of 10% bonds of Loris Co. on January 1, 2022, paying $376,100. The bonds mature January 1, 2032; interest is payable each July 1 and January 1. The discount of $23,900 provides an effective yield of 11%. Edama Company uses the effective-interest method and holds these bonds for collection. For the year ended December 31, 2022, Edama Company should report interest revenue from the Loris Co. bonds of: OA. $41,409. OB. $41,368. OC. $42,392. OD. $40,000.
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