Question

On January 31, 2013, B Corp. issued $600,000 face value, 12% bonds for $600,000 cash. The bonds are dated December 31, 2012, and mature on December 31, 2022. Interest will be paid semiannually on June 30 and December 31. What amount of accrued interest payable should B report in its September 30, 2013, balance sheet?

Answer 1

Answer:

The accrued interest payable B should report in its September 30, 2013 is  $54,000.

Explanation:

Bonds are long-term liability or debt, usually issued at face value, discount or premium.

The accrued interest payable on September 30, 2013 will be calculated as follows: Face value of the bond x Period interest rate (semi-annual).

Interest accrual: ($600,000 x 12% / 2) + ($600,000 x 12% / 2 x 3/6) = $54,000