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On January 1, Year 1, Gibbs Co. acquired bonds issued by Walden Co. They have a face amount of $100,000, pay 10% interest, and were
On January 1, Year 1, Gibbs Co. acquired bonds issued by Walden Co. They have a face amount of $100,000, pay 10% interest, and were purchased to yield 9%. The maturity date is December 31, Year 10, and interest is due every December 31. If Gibbs paid $106,380, it should report approximate interest income on the bonds, calculated using the effective-interest method, at December 31, Year 1, of A. $10,000 B. $9,574 C. $9,000 D. $9,362
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