Janis Corporation purchased $60,000 of Keller Corporation's 10 percent bonds at 96 plus accrued interest on March 1, 2012. The bonds mature on January 1, 2022, and interest is payable on June 30 and December 31. How much did Simpson pay in total on March 1, 2012?

Question

Quizplus · Accepted Answer

The purchase price is the face value times the percentage of face value paid plus accrued interest. 
The face value of the bonds is $60,000. 
The percentage paid is 96%, so the purchase price is $60,000 x 0.96 = $57,600. 
Accrued interest is not given, so we cannot calculate it. 
Therefore, the total amount paid by Janis Corporation on March 1, 2012, is $57,600. The correct answer is choice B ($58,600 is not possible, as it would require a percentage of more than 100%).

Janis Corporation Purchased $60,000 of Keller Corporation's 10 Percent Bonds