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Mercer Corporation acquired $400,000 of Park Company’s bonds on June 30, 2018, for $409,991.12. The bonds...

Mercer Corporation acquired $400,000 of Park Company’s bonds on June 30, 2018, for $409,991.12. The bonds carry a 12% stated interest rate and pay interest semiannually on June 30 and December 31. The appropriate market interest rate is 11%, and the bonds are due June 30, 2021.

Required: 1. Prepare an investment interest income and premium amortization schedule, using the:

a. straight-line method

b. effective interest method

2. Prepare journal entries to record the December 31, 2018, and December 31, 2020, interest receipts using both methods.

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ekkarill92 answered 1 year ago
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