Question 22

Sheridan Company purchased $1750000 of 10% bonds of Scott Company on January 1, 2021, paying $1650375. The bonds mature January 1, 2031; interest is payable each July 1 and January 1. The discount of $99625 provides an effective yield of 11%. Sheridan Company uses the effective-interest method and plans to hold these bonds to maturity. On July 1, 2021, Sheridan Company should increase its Debt Investments account for the Scott Company bonds by

$4981.

$3271.

$6541.

$9963.