On July 1, 2011, Houston Company purchased as a long-term investment Essex Company’s ten-year, 9 percent bonds, with a face value of $100,000 for…

On July 1, 2011, Houston Company purchased as a long-term investment Essex Company’s ten-year, 9percent bonds, with a face value of $100,000 for $95,200. Interest is payable semiannually on January 1 andJuly 1. The bonds mature on July 1, 2015. Houston uses the straight-line method of amortization. What is theamount of interest revenue that Houston should report in its income statement for the year ended December31, 2011?a. $3,900b. $4,500c. $5,100d. $5,700

Question:On July 1, 2011, Houston Company purchased as a long-term investment Essex Company’sten-year, 9 percent bonds, with a face value of $100,000 for $95,200. Interest is payablesemiannually…

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