Question
On January 1, Year 1, Company C purchased 10 of the $10,000 face value, 10%, 10 year bonds of Company D. The bonds mature on
On January 1, Year 1, Company C purchased 10 of the $10,000 face value, 10%, 10 year bonds of Company D. The bonds mature on December 31, Year 10, and pay interest annually on December 31. Company C purchased the bonds to yield 12% and classified the bonds as available-for-sale. The company's policy is to amortize the bonds' premium or discount according to the effective interest method. Information on present value factors is a as follows: Present value of $1 at 10% for ten periods 0.3855 Present value of $1 at 12% for ten periods 0.3220 Present value of an annuity of $1 at 10% for ten periods 6.1446 Present value of an annuity of $1 at 12% for ten periods 5.6502 For each item, enter the appropriate amount in the associated cell. Round all amounts to the nearest dollar. If no entry is necessary, enter a zero (0). Enter all amounts as positive values.
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