On July 1, 2018, Spear Co. issued 2,000 of its 10%, $1,000 bonds at 103 plus...
- On July 1, 2018, Spear Co. issued 2,000 of its 10%, $1,000
bonds at 103 plus accrued interest. The bonds are dated April 1,
2018 and mature on April 1, 2028. Interest is payable semiannually
on April 1 and October 1.
- What amount of cash did Spear receive from the bond issuance?
- What is the amount of accrued interest and how is this treated in the entry?
Homework Answers
a) Value of bond =2000×$ 1000=2000000
(2000000×1.03)=2060000
Accrued interest from april
=($2000000×.10×3/12)=50000
Total amount received =2110000
b)journal entry for accrued interest
Accrued interest a/c Dr 50000
To interest received 50000
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