Ascertain the amount of interest revenue accrued at December 31.
Answer to Problem 1MCQ
d. The amount of interest revenue accrued at December 31 is $625.
Explanation of Solution
Working note:
Debt investment:
Debt investments refer to the investments made in debt instrument by the investor at a predetermined interest and maturity period. Examples of debt investments are corporate bonds, government bonds, certificate of deposits.
Ascertain the amount of interest revenue accrued at December 31 as follows:
From the above Calculation it is clear that option (a), (b), (c) and (e) are incorrect, only option (d) is correct.
Hence the correct option is option c.
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Chapter 15 Solutions
Principles of Financial Accounting.
- Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the market of interest was 9%. The company uses the effective-interest method of amortization. At the end of the year, the company will record ________. A. a credit to cash for $28,733 B. a debit to interest expense for $31,267 C. a debit to Discount on Bonds Payable for $1,267 D. a debit to Premium on Bonds Payable for $1.267arrow_forwardA company issued $100,000, 5-year bonds, receiving $97,000. What is the balance sheet presentation immediately after the sale?arrow_forwardMedhurst Corporation issued $90,000 in bonds for $87,000. The bonds had a stated rate of 8% and pay interest quarterly. What is the journal entry to record the first interest payment?arrow_forward
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