On September 1, 2013, WXY bought 20 $1,000, 9 percent bonds at 94 plus $300 total accrued interest. The bonds were to be sold to finance a new machine to be purchased in the following year. Therefore, the bonds will be sold during 2014. Interest is paid each June 30 and December 31. The bonds were designated as FVTPL investments. On the purchase date, WXY paid a brokerage fee of $340. WXY should record the cost of this investment at:

Question

Quizplus · Accepted Answer

To determine the cost of the investment, we need to add the purchase price, accrued interest, and brokerage fee. 
Purchase price: 20 bonds x $1,000/bond x 0.94 = $18,800 
Accrued interest: $300 
Brokerage fee: $340 
Total cost: $18,800 + $300 + $340 = $19,140 
Therefore, the best choice is B) $19,140.

On September 1, 2013, WXY Bought 20 $1,000, 9 Percent