A company owns $100,000 of 9% bonds that pay interest on October 1 and April 1.The amount of interest accrued on December 31 (the company's year-end) would be:
A)$750
B)$1,500
C)$2,250
D)$4,500
E)$9,000

Question

Quizplus · Accepted Answer

The bonds pay interest on October 1 and April 1, which means that interest for the period of October 1 to December 31 has not yet been paid. Therefore, the amount of interest accrued on December 31 would be 3/6 (half of the year) of the annual interest payment. 
Annual interest payment = $100,000 x 9% = $9,000
Half of the annual interest payment = $4,500
Therefore, the amount of interest accrued on December 31 would be $4,500.

A Company Owns $100,000 of 9% Bonds That Pay Interest