Romer Corporation,a calendar-year firm,is authorized to issue $200,000 of 10 percent,20-year bonds dated January 1,2014,with interest payable on January 1 and July 1 of each year.
-If the bonds were issued on April 1,2014,the amount of accrued interest on the date of sale is

Question

Quizplus · Accepted Answer

The bonds were issued on April 1, which means that there are three months (January, February, March) between the bond's date of issue and the first interest payment date. Therefore, the accrued interest on the date of sale is 3/12 x 10% x $200,000 = $5,000.

Romer Corporation,a Calendar-Year Firm,is Authorized to Issue $200,000 of 10