Logan Co. purchased $500,000 of 8% bonds of Harper Co. on January 1, 2015, paying $478,500. The bonds mature on January 1, 2025; interest is payable each July 1 and January 1. The discount of $21,500 provides an effective yield of 9%. Logan Co. uses the effective-interest method and plans to hold these bonds to maturity. On July 1, 2015, Logan Co. should increase its Held-to-Maturity Debt Securities account for the Harper Co. bonds by: a. $2,752.50 b. $1,993.50 c. $1,250.00 d. $759.00

EBK CONTEMPORARY FINANCIAL MANAGEMENT
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Chapter6: Fixed-income Securities: Characteristics And Valuation
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Logan Co. purchased $500,000 of 8% bonds of Harper Co. on January 1, 2015, paying $478,500. The
bonds mature on January 1, 2025; interest is payable each July 1 and January 1. The discount of
$21,500 provides an effective yield of 9%. Logan Co. uses the effective-interest method and plans to
hold these bonds to maturity.
On July 1, 2015, Logan Co. should increase its Held-to-Maturity Debt Securities account for the
Harper Co. bonds by:
a. $2,752.50
b. $1,993.50
c. $1,250.00
d. $759.00
Transcribed Image Text:Logan Co. purchased $500,000 of 8% bonds of Harper Co. on January 1, 2015, paying $478,500. The bonds mature on January 1, 2025; interest is payable each July 1 and January 1. The discount of $21,500 provides an effective yield of 9%. Logan Co. uses the effective-interest method and plans to hold these bonds to maturity. On July 1, 2015, Logan Co. should increase its Held-to-Maturity Debt Securities account for the Harper Co. bonds by: a. $2,752.50 b. $1,993.50 c. $1,250.00 d. $759.00
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