Use the Following Information for Questions

question 46

Multiple Choice

Use the following information for questions.
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 holds these bonds for collection.
-On July 1, 2011, Patton Company should increase its Debt Investments account for the Scott Co.bonds by

• A)$2,392.
• B)$1,371.
• C)$1,196.
• D)$686.

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Definitions:

Manufacture

The process of converting raw materials into finished goods through the use of labor, machines, and chemical processes.

Gross Domestic Product

The total value of all goods and services produced within a country in a specific time period.

Telephone Bill

The monthly statement charging a customer for the usage of a telephone service.

Corporate Stock

signifies ownership shares in a corporation, offering holders a claim on part of the company's assets and earnings.