On May 1, 2010, Krypton Corporation sold $150, 000 of its 15%, five-year bonds dated January 1, 2010, for 100 plus accrued interest.How much cash was received?

Question

Quizplus · Accepted Answer

The bonds were sold for 100 plus accrued interest, which means the company received the full face value of $150,000 plus the interest that has accrued from January 1, 2010 (the date the bonds were dated) to May 1, 2010 (the date they were sold). Assuming interest accrues evenly throughout the year, the interest accrued for four months would be 15/12 x $150,000 x (4/12) = $7,500. Therefore, the total cash received would be $150,000 + $7,500 = $157,500.

On May 1, 2010, Krypton Corporation Sold $150, 000 of Its