Question
On June 1, 2014, Rio Corporation purchased as a long term investment 4,000 of the 1,000 face value, 8% bonds of Tokyo Corporation. Rio Corporation
On June 1, 2014, Rio Corporation purchased as a long term investment 4,000 of the 1,000 face value, 8% bonds of Tokyo Corporation. Rio Corporation has the positive intention and ability to hold these bonds to maturity. The bonds were purchased to yield 10% interest. Interest is payable semi-annually on December 1 and June 1. The bonds mature on June 1, 2020. On November 1, 2015, Rio Corporation sold the bonds for a total consideration of 3,925,000.
Based on the above and the result of your audit, determine the following: (Round off present value factors to four decimal places)
- The purchase price of the bonds on June 1, 2014 is
- The interest income for the year 2004 is
- The carrying value of the investment in bonds as of December 31, 2004 is
- The interest income for the year 2005 is
- The gain on sale of investment in bonds on November 1, 2005 is
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