Use the Following Information for Questions 72 and 73

question 24

Multiple Choice

Use the following information for questions 72 and 73.
Patton Company purchased $900,000 of 10% bonds of Scott Company on January 1, 2015, paying $846,225. The bonds mature January 1, 2025; interest is payable each July 1 and January 1. The discount of $53,775 provides an effective yield of 11%. Patton Company uses the effective-interest method and plans to hold these bonds to maturity.
-On July 1, 2015, Patton Company should increase its Debt Investments account for the Scott Company bonds by

• A) $5,382.
• B) $3,084.
• C) $2,691.
• D) $1,542.

---

Definitions:

Certificates of Deposit

Financial instruments offered by banks that provide an interest rate premium in exchange for the customer agreeing to leave a lump-sum deposit untouched for a predetermined period of time.

General Intangibles

Assets that are non-physical in nature, such as patents, copyrights, trademarks, and goodwill.

Copyrights

A form of intellectual property law that gives the creator of an original work exclusive rights to its use and distribution, typically for a certain period.

Franchises

Business models where owners license their operations, products, branding, and procedures to independent operators.