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Homework Quiz—12 S11 Section 1

Homework Quiz—12 S11 Section 1 - S11...

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S11 Homework Quiz— 12 Section 1 Name Section At 12/1/08 ABC Company purchased bonds for which it prepared the following bond asset table. Date Interest Revenue Cash Flow Change in Carrying Amount Carrying Amount 12/1/08 594,908  6/1/09 18,442  18,000  442  595,350  12/1/09 18,456  18,000  456  595,806  6/1/10 18,470  18,000  470  596,276  12/1/10 18,485  18,000  485  596,761  6/1/11 18,500  18,000  500  597,260  12/1/11 18,515  18,000  515  597,775  6/1/12 18,531  18,000  531  598,306  12/1/12 18,547  18,000  547  598,854  6/1/13 18,564  18,000  564  599,418  12/1/13 18,582  618,000  (599,418) The bonds were purchased for $594,908 and are classified in the “Hold to Maturity” category. Required : 1. What is the bond’s face interest rate? 2. What is the bond’s effective or market interest rate? 3. What was the bond’s 2009 interest revenue? 4. In the table below, write the journal entry that ABC made on 12/1/08 for its investment in the bond. 5. In the table below, write the journal entry that ABC made on 6/1/10 for the bond investment. Assume the correct bond investment adjusting entry was made on 12/31/09.
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