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Patton Company purchased $1,500,000 of 10% bonds of Scott Company on January 1,2021 , paying $1,410,375. The bonds mature January 1,2031 ; interest is payable
Patton Company purchased $1,500,000 of 10% bonds of Scott Company on January 1,2021 , paying $1,410,375. The bonds mature January 1,2031 ; interest is payable each July 1 and January 1. The discount of $89,625 provides an effective yield of 11%. Patton Company uses the effective-interest method and plans to hold these bonds to maturity. On July 1, 2021, Patton Company should increase its Debt Investments account for the Scott Company bonds by a. $8,970. b. $5,140. c. $4,485. d. $2,571
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