7. Ahmed Company issues $20,000,000 of 10-year, 9% bonds on March 1, 2007 at 97 plus...

Question

Question

Answer 1

Answer #1

Let us first calculate the interest for the period

Interest would be for TWO months - January and February

Interest = 20,000,000 X 9% X 2/12 = $ 300,000

Amount received on issue date = (20,000,000 / 100 X 97) + 300,000 = 19,400,000 + 300,000 = 19,700,000

Cash received on issue date = $ 19,700,000

Answer 2

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