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Larsen Company established a sinking fund for the retirement of long-term bonds. Using cash from the sinking fund, Larsen purchased 10% bonds of Verimore Industries

Larsen Company established a sinking fund for the retirement of long-term bonds. Using cash from the sinking fund, Larsen purchased 10% bonds of Verimore Industries with interest payable March 1 and September 1 on May 15. The bonds had a par value of $120,000 plus accrued interest.

The journal entry to record the purchase will include:

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