Freet Inc. is preparing its cash budget for November. The budgeted beginning cash balance is $21,000. Budgeted cash receipts tot
1 answer:
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Answer:
correct option is A. Investment in bonds $10,400
Interest receivable 266
Cash $10,666
Explanation:
given data
face value = $10,000
bonds = 8%
mature time = 5 years
solution
we know at At 104
price paid for the bonds = $10,400 in absence of accrued interest
this is because of bond that is purchase between interest date and cash interest for time May 1 to September 1 4 months
and here interest will be for 4 month is
interest = face value × bonds rate × timer
interest = $10000 × 8% ×
interest = $266.67
so total amount paid will be
total amount paid = $10400 + $266.67
total amount paid = $10666.67
as on October 31 interest received here interest receivable will credit of $266
so correct option is A. Investment in bonds $10,400
Interest receivable 266
Cash $10,666