Question

On July 1, 2016, Tremel purchased a ten-year $5,000 bond. The bond has a stated interest...

On July 1, 2016, Tremel purchased a ten-year $5,000 bond. The bond has a stated interest rate of 5%, payable annually on July 1. On June 2, 2017, 336 days from the last interest payment, Tremel sold the bond. The selling price includes how much accrued interest?

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

The Selling price Includes the accrued interest for the full year i.e. 336 days.

Because the interest recieved on bond is on annual basis and the interest recieved fully on bonds on 1 july 2017 but Tremel sold the bonds before coming this date. So, Accrued Interest which are recievable to Tremel is

The Accrued Interest is including in the Bond Selling price = $ 5,000 * 5% * 336 / 365

The Accrued Interest = $ 230.14

If you have any query related to above question then you can ask me directly in a comment.

My priority is your satisfaction.

Thanks

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On July 1, 2016, Garden Works, Inc. issued $301,100 of ten-year, 7% bonds for $308,500. The...
On July 1, 2016, Garden Works, Inc. issued $301,100 of ten-year, 7% bonds for $308,500. The bonds were dated July 1, 2016, and semi-annual interest will be paid each December 31 and June 30. Garden Works Inc. uses the straight-line method of amortization. Which of the following statements is incorrect? The semi-annual interest expense is $740 less than the semi-annual interest payment. The market rate of interest was less than the coupon rate of interest on July 1, 2016. The...
Bond Discount, Entries for Bonds Payable Transactions On July 1, 2016, Brower Industries Inc. issued $5,500,000...
Bond Discount, Entries for Bonds Payable Transactions On July 1, 2016, Brower Industries Inc. issued $5,500,000 of 7-year, 11% bonds at a market (effective) interest rate of 12%, receiving cash of $5,244,387. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 2016. For a compound...
A $5,000 bond had a coupon rate of 5.50% with interest paid semi-annually. Ali purchased this...
A $5,000 bond had a coupon rate of 5.50% with interest paid semi-annually. Ali purchased this bond when there were 6 years left to maturity and when the market interest rate was 5.75% compounded semi-annually. He held the bond for 3 years, then sold it when the market interest rate was 5.25% compounded semi-annually. a. What was the purchase price of the bond? Round to the nearest cent. b. What was the selling price of the bond? Round to the...
On January 1, 2016, Parker Company issued a three-year, $100,000, 5% bond. The interest is payable...
On January 1, 2016, Parker Company issued a three-year, $100,000, 5% bond. The interest is payable annually each December 31. The market rate of interest for companies similar to Parker is 6%. Parker uses the effective-interest amortization method. The issue price of the bond on January 1, 2016 is closest to: A. $97,327 B. $92,639. C. $102,723. D. $97,567. Based on the same information provided above, Parker’s interest expense for December 31, 2016 is closest to: -$5,839. -$5,257. -$5,887. -$5,000.
The Platte Corporation issues a 5-year note payable on January 1, 2016 for $5,000. The interest...
The Platte Corporation issues a 5-year note payable on January 1, 2016 for $5,000. The interest rate is 5% and the annual payment of $1,156, due each December 31, includes both interest and principal. Which of the following shows the effect of the December 31, 2016 payment? Assets = Liab + Equity Revenue - Expense = Net Inc Cash Flow A. (1,156) = (1,156) + NA NA - NA = NA (1,156)FA B. (1,156) = (906) + (250) NA -...
On January 1 a company issues a $75,000 bond that pays interest semi-annually. The first interest...
On January 1 a company issues a $75,000 bond that pays interest semi-annually. The first interest payment of $1,875 is paid on July 1. What is the stated annual interest rate on the bond? 5.00% 2.50% 1.25% 10.00% On October 1 a company sells a 3-year, $2,500,000 bond with an 8% stated interest rate. Interest is paid quarterly and the bond is sold at 89.35. On October 1 the company would collect ________. $200,000 $558,438 $2,233,750 $6,701,250
On 1 July 2016, FBI Limited issued a 10-year debenture of $200000 at a price of...
On 1 July 2016, FBI Limited issued a 10-year debenture of $200000 at a price of 93.496, stated interest rate of 8%, payable half-yearly. The half-yearly interest dates are 1 July and 31 December. The market interest rate is 9%. FBI Limited amortises the company liabilities using the effective interest rate method. The company's financial year ends on 30 September. Required: Journalise the above transactions up to 31 December 2016 (including the relevant adjusting entries for the financial year-end 30...
Champs Ltd. is authorized to issue $3,500,000 of 4?%, 10?-year bonds payable. On December? 31, 2016?,...
Champs Ltd. is authorized to issue $3,500,000 of 4?%, 10?-year bonds payable. On December? 31, 2016?, when the market interest rate is 5?%, the company issues $2,800,000 of the bonds. Champs Ltd. amortizes bond discount by the? effective-interest method. The semiannual interest dates are June 30 and December 31. Requirements 1. Use the PV function in Excel to calculate the issue price of the bonds. 2. Prepare a bond amortization table for the first year of the bond 3. Record...
Stephanie Ram Corporation have a $780,000 "bond issue" dated February 1, 2016 due in 10 years...
Stephanie Ram Corporation have a $780,000 "bond issue" dated February 1, 2016 due in 10 years with an annual interest rate of 6%. Interest is payable February 1 and August 1. On April 1, 2016, the bond was sold for $715,100 plus accrued interest. Using the straight-line method, prepare the general journal entries for each of the following: a) The issuance of the bond on April 1, 2016. b) Payment of the semi-annual interest and the amortization of the discount...
Bond Discount, Entries for Bonds Payable Transactions, Interest Method of Amortizing Bond Discount On July 1,...
Bond Discount, Entries for Bonds Payable Transactions, Interest Method of Amortizing Bond Discount On July 1, Year 1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $36,000,000 of 20-year, 11% bonds at a market (effective) interest rate of 14%, receiving cash of $28,802,160. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: For all journal entries: For a compound transaction, if an amount box does...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT