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Review the following information:
On January 1, 2006, Jamona Corp. purchased 12% bonds, having a
maturity value of $300,000, for $322,744.44. The bonds provide the
bondholders with a 10% yield. They are dated January 1, 2006, and
mature January 1, 2011, with interest receivable December 31 of
each year. The company uses the effective-interest method to
allocate unamortized discount or premium. The bonds are classified
as available-for-sale. The fair value of the bonds at December 31 of
each year is as follows:
2006 – $320,500
2007 – $309,000
2008 – $308,000
2009 – $310,000
2010 – $300,000
The following information is available from Jamona’s inventory
records
Units
January 1, 2007 (beginning inventory)
600
Unit Cost
$ 8.00
Purchases:
January 5, 2007 1,200 9.00
January 25, 2007 1,300 10.00