patton company purchased 400000 of 10 percent

Question

Patton Company purchased $400,000 of 10 percent bonds of Scott Co. on 1^st January, 2011, paying $376,100. The bonds mature 1^st January, 2021; interest is payable each 1^st July and 1^st January. The discount of $23,900 gives an effective yield of 11 percent. Patton Company uses the effective-interest method and plans to hold these bonds to maturity.