On May 1, 2011, Stanton Company purchased $50,000 of Harris Company's 12% bonds at 100 plus accrued interest of $2,000. On June 30, 2011, Stanton received its first semiannual interest. On February 1, 2012, Stanton sold $40,000 of the bonds at 103 plus accrued interest. What are the total proceeds from the February 1, 2012 sale?

Question

Quizplus · Accepted Answer

The purchase price of the bonds was $50,000 + $2,000 = $52,000. 
The first semiannual interest received by Stanton was $50,000 x 12% x 6/12 = $3,000. 
The carrying value of the bonds as of February 1, 2012 was $50,000 - $40,000 = $10,000, and the accrued interest was $10,000 x 12% x 8/12 = $800. 
Therefore, the total proceeds from the sale on February 1, 2012 was $40,000 x 1.03 + $800 = $41,600. 
The best choice is D.

On May 1, 2011, Stanton Company Purchased $50,000 of Harris