Answer:
Wildhorse Company
For the year ended December 31, 2021, Wildhorse Company should report interest revenue from the Scott Company bonds of:
= $152,709.
Explanation:
a) Data and Calculations:
Face value of bonds purchased on January 1, 2021 = $1,350,000
Interest rate on the bonds = 11%
Effective interest rate = 12%
Cash paid for the bonds = $1,272,578
Discount on bonds = $77,422
Interest revenue for 2021 = $1,272,578 * 12%
= $152,709 based on the effective interest method.
