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Investment income

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On October 1, 2007, Lyman Co. purchased to hold to maturity, $1,000, 9% bonds for $208,000. An additional $6,000 was paid for accrued interest. Interest is paid semi-annually on December 1 and June 1 and the bonds mature on December 1, 2011. Lyman uses straight-line amortization. Ignoring income taxes, the amount to be reported in Lyman's 2007 income statement from this investment should be:

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Solution Summary

The solution explains how to calculate the amount of investment income from a bond investment.

Solution Preview

The bonds are purchased at a premium. The income would be interest income less the amortization ...

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