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What amount did Sunland Company pay for Buffalo Ltds bonds

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Question - On January 1, 2021, Buffalo Ltd. issued bonds with a maturity value of $5.40 million for $5,175,360, when the market rate of interest was 7%. The bonds have a contractual interest rate of 6% and mature on January 1, 2026. Interest on the bonds is payable semi-annually on July 1 and January 1 of each year. On January 1, 2021, Sunland Company, a public company, purchased Buffalo Ltd. bonds with a maturity value of $1.08 million to earn interest. On December 31, 2021, the bonds were trading at 97. Both companies' year end is December 31.

Required -

a. What amount did Sunland Company pay for Buffalo Ltd.'s bonds?

b. Prepare the journal entry for Sunland Company (investor) on January 1, 2021.

c. bond amortization schedule for Sunland Company for the first four interest periods.

Reference no: EM132574768

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