Question

Company purchased $60,000 of Stanton Company’s 12% bonds at 100 plus accrued interest of $2,400. On June 30, Pierce received its first semiannual interest. On February 1, Pierce sold $50,000 of the bonds at 103 plus accrued interest.What are the total proceeds from the February 1 sale?
a. $52,000
b. $50,000
c. $52,400
d. $51,500

Answer 1

Answer:

d. $51,500

Explanation:

Proceed from sale of the bonds

face value x quote

50,000 x 103/100 = 51,500

The company will recognize a gain from the sale of 1,500 dollars as it sold  the investment for 51,500 while it was valued at 50,000 in their books