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Lance Brothers Enterprises acquired $720,000 of 3% bonds, dated July 1, on July 1, 2018, as a long-term investment. Management has the positive intent and ability to hold the bonds until maturity. The market interest rate(yield) was 4% for bonds of similar risk and maturity. Lance Brothers paid $600,000 for the investment in bondsand will receive interest semiannually on June 30 and December 31. Prepare the journal entries (a) to recordLance Brothers’ investment in the bonds on July 1, 2018, and (b) to record interest on December 31, 2018, at theeffective (market) rate

Lance Brothers Enterprises acquired $720,000 of 3% bonds, dated July 1, on July 1, 2018, as a long-term investment. Management has the positive intent and ability to hold the bonds until maturity. The market interest rate(yield) was 4% for bonds of similar risk and maturity. Lance Brothers paid $600,000 for the investment in bondsand will receive interest semiannually on June 30 and December 31. Prepare the journal entries (a) to recordLance Brothers’ investment in the bonds on July 1, 2018, and (b) to record interest on December 31, 2018, at theeffective (market) rate

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Lance Brothers Enterprises acquired $720,000 of 3% bonds, dated July 1, on July 1, 2018, as a long-term investment. Management has the positive intent and ability to hold the bonds until maturity. The market interest rate
(yield) was 4% for bonds of similar risk and maturity. Lance Brothers paid $600,000 for the investment in bonds
and will receive interest semiannually on June 30 and December 31. Prepare the journal entries (a) to record
Lance Brothers’ investment in the bonds on July 1, 2018, and (b) to record interest on December 31, 2018, at the
effective (market) rate

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