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On June 1 2010 Chloe Inc purchased as a long term investment 800 of the $1000 face value 9% bonds of Logan Corporation for $731052 The bonds were purchased to yield 11% interest Interest is

On June 1, 2010, Chloe Inc. purchased as a long-term investment 800 of the $1,000 face value, 9% bonds of Logan Corporation for $731,052. The bonds were purchased to yield 11% interest. Interest is payable semiannually on December 1 and June 1. The bonds mature on June 1, 2016. Chloe uses the effective-interest method of amortization. On November 1, 2011, Chloe sold the bonds for $756,400. This amount includes the appropriate accrued interest. Chloe intended to hold these bonds until they matured, so year-to-year market value fluctuations were ignored in accounting for the bonds.
Instructions:
Prepare a schedule showing the income or loss before income taxes from the bond investment that Chloe should record for the years ended December 31, 2010, and 2011.

 

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Apr 29 2020 View more View Less

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