On January 1, 2025, Pharoah Company purchased $370,000, 8% bonds of Aguirre Co. for $341,429. The bonds were purchased to yield 10% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2030. Pharoah Company uses the effective-interest method to amortize discount or premium. On January 1, 2027, Pharoah Company sold the bonds for $343,034 after receiving interest to meet its liquidity needs.
On January 1, 2025, Pharoah Company purchased $370,000, 8% bonds of Aguirre Co. for $341,429. The bonds were purchased to yield 10% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2030. Pharoah Company uses the effective-interest method to amortize discount or premium. On January 1, 2027, Pharoah Company sold the bonds for $343,034 after receiving interest to meet its liquidity needs.
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 1MC
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