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 a $6,000,10 percent,10-year bond was issued at 104 plus accrued interest two months after the authorization date,how much cash was received by the issuer?

Question

Quizplus · Accepted Answer

The bond was issued at 104, which means 104% of the face value. Therefore, $6,000 * 1.04 = $6,240. Additionally, since the bond was issued two months after the authorization date, two months of accrued interest must be added: $6,000 * 10% * (2/12) = $100. Total cash received = $6,240 + $100 = $6,340.

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