Patton Co. purchased $400,000 of 10% bonds of Scott Co. on January 1, 2011, paying $376,100. The bonds mature January 1, 2021; interest is payable each July 1 and January 1. The discount of $23,900 provides an effective yield of 11%. Patton Co. uses the effective-interest method and plans to hold these bonds to maturity. On July 1, 2011, Patton Co. should increase its Held-to-Maturity Debt Securities account for the Scott Co. bonds by: a. $2,392. b. $1,371. c. $1,196. d. $686.
Patton Co. purchased $400,000 of 10% bonds of Scott Co. on January 1, 2011, paying $376,100. The bonds mature January 1, 2021; interest is payable each July 1 and January 1. The discount of $23,900 provides an effective yield of 11%. Patton Co. uses the effective-interest method and plans to hold these bonds to maturity. On July 1, 2011, Patton Co. should increase its Held-to-Maturity Debt Securities account for the Scott Co. bonds by: a. $2,392. b. $1,371. c. $1,196. d. $686.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 1RE
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![Patton Co. purchased $400,000 of 10% bonds of Scott Co. on January
1, 2011, paying $376,100. The bonds mature January 1, 2021; interest
is payable each July 1 and January 1. The discount of $23,900 provides
an effective yield of 11%. Patton Co. uses the effective-interest method
and plans to hold these bonds to maturity.
On July 1, 2011, Patton Co. should increase its Held-to-Maturity Debt
Securities account for the Scott Co. bonds by:
a. $2,392.
b. $1,371.
c. $1,196.
d. $686.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F27946a28-77ed-49fd-b093-a4c37e0d04aa%2F8542e9ed-2060-4bf0-9d37-3429ddbb9486%2F1frjdkt_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Patton Co. purchased $400,000 of 10% bonds of Scott Co. on January
1, 2011, paying $376,100. The bonds mature January 1, 2021; interest
is payable each July 1 and January 1. The discount of $23,900 provides
an effective yield of 11%. Patton Co. uses the effective-interest method
and plans to hold these bonds to maturity.
On July 1, 2011, Patton Co. should increase its Held-to-Maturity Debt
Securities account for the Scott Co. bonds by:
a. $2,392.
b. $1,371.
c. $1,196.
d. $686.
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