Tom purchased a bond on March 31 for $10,000,plus $150 accrued interest.In December,Tom collected $600 interest from the bond.Tom's interest income from the bond for the year is $450.

Question

Quizplus · Accepted Answer

Tom originally paid $150 in accrued interest on March 31, bringing his initial investment in the bond to $10,150. Throughout the year, he collected $600 in interest, bringing his total received interest to $750 ($150 accrued interest + $600 collected interest).

Therefore, his interest income from the bond for the year is $750 - $10,150 = -$9,400. This means he actually lost money on the bond.

Tom Purchased a Bond on March 31 for $10,000,plus $150