Homework Answers
In the books bond interest receivable shall have been recorded on purchase.
Bond interest receivable = Face value X rate of interest X Months interest accrued/ 12
= $4,000 X 18% X 4/12 = $240
Interest income for two months from purchase date to interest receipt date is:
Interest income = Face value X rate of interest X Months interest earned/ 12
= $4,000 X 18% X 2/12 = $120
Total interest received = Face value X rate of interest X Months interest paid/ 12
= $4,000 X 18% X 6/12 = $360
Correct option is C
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