A company purchased $81,000 of 6% bonds on May 1 at par value. The bonds pay...
A company purchased $81,000 of 6% bonds on May 1 at par value. The bonds pay interest on March 1 and September 1. The amount of interest accrued on December 31 (the company's year-end) would be:
Homework Answers
Par value of bonds = $81,000
Interest rate = 6%
Since last interest was paid on Sept 1, hence on Dec 31, interest accrued for 4 months.
Accrued interest on Dec 31 = Par value of bonds x Interest rate x Time period
= 81,000 x 6% x 4/12
= $1,620
The amount of interest accrued on December 31 = $1,620
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