Alpha Corporation issued $100,000 face value,10-year,8% bonds on October 1.Interest is payable each April 1 and October 1.Accrued interest on December 31 amounts to $2,000.

Question

Quizplus · Accepted Answer

Since the bonds were issued on October 1 and interest is payable each October 1 and April 1, it means that interest was already accrued from October 1 to December 31 (3 months). Therefore, the accrued interest of $2,000 is correct.

Alpha Corporation Issued $100,000 Face Value,10-Year,8% Bonds on October 1