Question
On January 1, 2018, NRl purchased $100,000 of FT Company bonds at a discount of $10,000. The FT bonds pay 6% interest but were purchased
On January 1, 2018, NRl purchased $100,000 of FT Company bonds at a discount of $10,000. The FT bonds pay 6% interest but were purchased when the market interest rate was 8% for bonds of similar risk and maturity. The bonds pay interest semiannually on June 30 and December 31 of each year. National Retail accounts for the bonds as a held-to-maturity investment and uses the effective interest method. In National Retails December 31, 2018, journal entry to record the second period of interest would include a debit Discount on Bond Investment of:
a. | $3,000 | |
b. | $6,000 | |
c. | None of the answer choices are correct. | |
d. | $3,624 | |
e. | $624 |
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