On January 1, 2020, National Retail purchased $100,000 of GEH Company bonds at a discount...
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Accounting
On January 1, 2020, National Retail purchased $100,000 of GEH Company bonds at a discount of $10,000. The GEH bonds pay 6% interest but were purchased when the market interest rate was 8% for bonds of similar risk and maturity. The bonds pay interest semiannually on June 30 and December 31 of each year. National Retail accounts for the bonds as a held-to-maturity investment and uses the effective interest method. In National Retails annual income statement, Interest revenue will show:
a. $6,000 b. $3,624 c. None of the answer choices are correct. d. $0 e. $624
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