Reference no: EM133123773
Question - On April 1st of the current fiscal year, a publicly-traded company issued 2,000 bonds each with a maturity value of $10,000 for a total maturity value of $20,000,000. They received a total of $18,600,000. Every bond sold for the same price. The stated annual interest rate for the bonds is 4% and interest is to be paid semi-annually on September 30th and March 31st. The bonds mature 10 years from the issue date. The issuing company uses the straight-line method of amortization and their fiscal year ends on December 31st.
An investor purchased five bonds each with a maturity value of $10,000 on April 1, the issue date. Not including any transaction costs, how much did the investor pay for the purchase of the five bonds?
An investor purchased a $10,000 bond on April 1, the issue date, and the investor still owned the bond on December 31st, the end of the current fiscal year. How much cash did the investor receive in interest from this investment in the current fiscal year?
In financial statements issued as of December 31st, the close of the fiscal year in which the bonds were issued, what amount should the issuing company report as accrued interest payable on behalf of the bonds?
For the calendar year in which the bonds are issued, what amount should the company record to recognize the amortization of bond discount?
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