Business Administration 2257 Study Guide - Accrued Interest

• School: Western University
• Department: Business Administration
• Course: Business Administration 2257
• Professor: Eric Silverberg

Document Summary

Issue 15000 5. 5 per cent bonds on april 1, 2011. Payment dates on october 1 and april 1. Callable at 98. 5 any time after october 1, 2011. Expense: ,680,058 6% 6/12 = ,402. Paid: ,000,000 5. 5% 6/12 = ,500. December 29, 2011: recalled and retired 20 percent of the outstanding bonds. Cv: (,680,058 + ,902) 20% = ,941,592. Paid: ,000,000 20% 5. 5% 3/12 = ,250. Cv: (,680,058 + ,902) 80% = ,766,368. Expense: ,766,368 6% 4/12 = ,327. Payable: ,000,000 80% 5. 5% 4/12 = ,000. April 15, 2011 bought 300 5 per cent bonds issued plus accrued interest. Interest paid on march 1 and september 1, set to mature on september 1, November 2, 2011 sold 80% of bonds at market price plus accrued interest. Carrying value: (,197 - ,875) 80% = ,658. Cash received (interest): ,000 80% 5% 2/12 = ,000. Cash received (bonds): ,576 - ,000 = ,576.