On $1$ January $2019,$ Martin Company purchased a $7-$year bond issued by the Nelson

Company with a coupon interest rate of $3\%.$ At the accounting year end of $2022,$ the

accountant $($Lawson$)$ of Martin Company found that the Nelson Company's earning

ability was very low because of the loss of a major customer. The bond interest

payments in $2022$ were not punctual. The cash flow statement of Nelson Company

showed a deficit cash balance for the two consecutive years of $2021$ and $2022.$ The

effective interest rate used by Martin Company is $5\%.$