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Homework Quiz—12 S11 Section 3

Homework Quiz—12 S11 Section 3 - S11...

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S11 Homework Quiz— 12 Section 3 Name Section At 11/1/08 ABC Company purchased bonds for which it prepared the following bond asset table. Date Interest Revenue Cash Flow Change in Carrying Amount Carrying Amount 409,730  5/1/09 15,979  15,120  859  410,589  11/1/09 16,013  15,120  893  411,482  5/1/10 16,048  15,120  928  412,410  11/1/10 16,084  15,120  964  413,374  5/1/11 16,122  15,120  1,002  414,376  11/1/11 16,161  15,120  1,041  415,417  5/1/12 16,201  15,120  1,081  416,498  11/1/12 16,243  15,120  1,123  417,621  5/1/13 16,287  15,120  1,167  418,788  11/1/13 16,333  435,120  (418,787) The bonds were purchased for $409,730 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 2011 interest revenue? 4. In the table below, write the journal entry that ABC made on 11/1/08 for its investment in the bond. 5. In the table below, write the journal entry that ABC made on 5/1/11 for the bond investment. Assume the correct bond investment adjusting entry was made on 12/31/10.
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