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QUESTION
On January 1, 2014, Oaken Furniture Co. issued $700,000 of 10% bonds and received cash totaling $795,141. Interest is payable semiannually on January...
On January 1, 2014, Oaken Furniture Co. issued $700,000 of 10% bonds and received cash totaling $795,141. Interest is payable semiannually on January 1 and July 1. The maturity date on these bonds is January 1, 2024. The firm uses the effective –interest method of amortizing discounts and premiums. The bonds were sold to yield an effective interest rate of 8%. Oaken Furniture Co. is a calendar-year corporation.
