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Wildhorse Company purchased $1950000 of 9% bonds of Scott Company on January 1, 2021, paying $1842375. The bonds mature January 1, 2031; interest is payable
Wildhorse Company purchased $1950000 of 9% bonds of Scott Company on January 1, 2021, paying $1842375. The bonds mature January 1, 2031; interest is payable each July 1 and January 1. The discount of $107625 provides an effective yield of 10%. WildhorseCompany uses the effective-interest method and plans to hold these bonds to maturity. On July 1, 2021, Wildhorse Company should increase its Debt Investments account for the Scott Company bonds by
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