On September 1, the Consul Company acquired $10,000 face value, 8% bonds of Envoy Corporation at 104. The bonds were dated May 1
1 answer:
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
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Morgan will get $1600 with the process of simple interest.
<h3>what is simple interest?</h3>Simple interest is calculated based on a loan's principal or the initial deposit into a savings account. Simple interest doesn't compound, therefore a creditor will only charge interest on the principal sum, and a borrower will never be required to pay further interest on the interest that has already accrued.
Rate of interest = 12%
principal = $1000
Time = 5 years
Simple interest
Now amount = 1000+600 = 1600.
Therefore, Morgan will get $1600.
To learn more about simple interest from the given link
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