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Determine the interest income Chee should report

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Problem - Chee purchases Tan, Inc. bonds for $108,000 on January 2, 2019. The face value of the bonds is $100,000; the maturity date is December 31, 2023; and the annual interest rate is 5%. Chee will amortize the premium only if he is required to do so. Chee sells the bonds on July 1, 2021, for $106,000.

Required -

a. Determine the interest income Chee should report for 2019.

b. Calculate Chee's recognized gain or loss on the sale of the bonds in 2021.

Reference no: EM132659794

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