Pharoah Company purchased $1700000 of 11% bonds of Scott Company on January 1, 2021, paying $1602375. The bonds mature January 1, 2031; interest is payable each July 1 and January 1. The discount of $97625 provides an effective yield of 12%. Pharoah Company uses the effective-interest method and plans to hold these bonds to maturity. On July 1, 2021, Pharoah Company should increase its Debt Investments account for the Scott Company bonds by $5285. O $4881. $2643. $9763.

Pharoah Company purchased $1700000 of 11% bonds of Scott Company on January 1, 2021, paying $1602375. The bonds mature January 1, 2031; interest is payable each July 1 and January 1. The discount of $97625 provides an effective yield of 12%. Pharoah Company uses the effective-interest method and plans to hold these bonds to maturity. On July 1, 2021, Pharoah Company should increase its Debt Investments account for the Scott Company bonds by $5285. O $4881. $2643. $9763.

Financial Accounting

14th Edition

ISBN:9781305088436

Author:Carl Warren, Jim Reeve, Jonathan Duchac

Publisher:Carl Warren, Jim Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 5E

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