$3,588. $2,056. $1,794. $1,028. Patton Company purchased $600,000 of 10% bonds o

Question

       $3,588.
       $2,056.
       $1,794.
       $1,028.

Patton Company purchased $600,000 of 10% bonds of Scott Co. on January 1, 2013, paying $564,150. The bonds mature January 1, 2023; interest is payable each July 1 and January 1. The discount of $35,850 provides an effective yield of 11%. Patton Company uses the effective-interest method and plans to hold these bonds to maturity.

On July 1, 2013, Patton Company should increase its Debt Investments account for the Scott Co. bonds by (Points : 2)

Explanation / Answer

To be increase by = 35,850/20 = $1,794

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