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What is the net amount on Sam balance sheet

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Problem - Sam Company purchased $1,200,000 of 8%, 5-year bonds from Mike, Inc. on January 1, 2020, with interest payable on December 31. The bonds sold for $1,300,000 at an effective interest rate of 7%. Sam uses the effective interest method and accounts for the bonds using the Available-for-Sale Method.

At December 31, 2020, the fair value of the Mike, Inc. bonds was $1,250,000.

Required -

A. Record the necessary entries for Sam's bond investment account in 2020? Round to the nearest dollar.

B. What is the net amount on Sam's balance sheet for this debt investment at the end of 2020? Show and Label your calculations. Write the answer on the line provided.

Reference no: EM132859804

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