On October 1,2014,Southpark Inc.issued,at 101 plus accrued interest,800 of its 10 percent,$1,000 bonds.The bonds are dated July 1,2014,and mature on July 1,2021.Interest is payable semiannually on January 1 and July 1.At the time of issuance,Southpark would receive cash of

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Southpark Inc. issued the bonds at 101% of the face value, which means they issued them at 101% of $800,000 (800 bonds * $1,000 each = $800,000). So, the initial amount is $808,000 (101% of $800,000). However, since the bonds were issued on October 1 and are dated July 1, there are three months of accrued interest that Southpark Inc. would receive because interest is payable semiannually on January 1 and July 1. The semiannual interest per bond is $50 (10% of $1,000 / 2). For 800 bonds, this is $40,000 every six months. For three months (half of a semiannual period), this is $20,000. Therefore, the total cash received is $808,000 + $20,000 = $828,000.