Question

on june 1, $40,000 of treasury bonds were purchased between interest dates. the broker commission was $600. the bonds pay interest at 12%, which is paid semiannually on january 1 and july 1. how much interest revenue will be recorded on july 1?

Answer 1

Given:
treasury bond = 40,000
brokers commission = 600
interest rate = 12$ p.a
interest paid semi-annually, january 1 and july 1.

Since the treasury bond was sold on June 1, its interest revenue will only be equal to 1 month ( June 1 to July 1).

12% / 12 months = 1% per month

40,000 * 1% = 400 interest revenue to be recorded on July 1.