On January 31, 2021, B Corp. issued $600,000 face value, 12% bonds for $600,000 cash. The...

On January 31, 2021, B Corp. issued $600,000 face value, 12% bonds for $600,000 cash. The bonds are dated December 31, 2020, and mature on December 31, 2030. Interest will be paid semiannually on June 30 and December 31. What amount of cash received should B report at january 31, 2021

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Expert Solution

AMOUNT OF CASH RECEIVED ON JANUARY 31, 2021 = $600,000 + $600,000 * 6% * 1/6

= $606,000

SINCE THE BONDS ARE ISSUED ON FACE VALUE, SO THE AMOUNT OF CASH RECEIVED ON ISSUE OF BONDS WOULD BE EQUAL TO PAR VALUE OF BONDS i.e $600,000. plus THE INTEREST AMOUNT FOR 1 MONTH AS THE INTEREST PERIOD Date is December 31, 2020 and the BONDS HAVE BEEN ISSUED ON JANUARY 31, 2021.

ekkarill92 answered 2 years ago

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