The discount of 23900 provides an effective yield of 11., Ask an Expert

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Patton Company purchased $400,000 of 10% bonds of Scott Co. on January 1, 2011, paying $376,100. The bonds mature January 1, 2021; interest is payable each July 1 and January 1. The discount of $23,900 provides an effective yield of 11%. Patton Company uses the effective-interest method and plans to hold these bonds to maturity.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M948292

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