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What the acquisition of bonds on January

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Question - On January 1, 2020, Saturn Inc. acquired bonds of Mars Ltd., to yield the current market rate of interest. The bonds were dated January 1, 2020, and mature on December 31, 2024, with interest payable annually on January 1. Saturn will use the FV-NI model and the effective interest method of amortization of bond premium or discount.

Face value of bonds 115,000

Coupon rate 9%

Market rate on Jan. 1, 2020 10%

Fair value at Dec. 31, 2020 117,300

Required -

a) What the acquisition of bonds on January 1, 2020,

b) Prepare the year-end entries required at December 31, 2020, and the receipt of the first interest payment on January 1, 2021.

Prepare the following entries for Saturn Inc., rounding all values to the nearest dollar.

Reference no: EM132938036

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