Question

"if intervale railway invests​ $100,000 in​ 5% bonds at face value that the company intends to hold until the bond maturity​ date, the interest revenue recognized when each semiannual interest payment is received would be recorded as a"

Answer 1

Given:

Investment worth = $100,000

Bond Percentage: 5% at face value that the company intends to hold until the bond maturity date

Therefore, the interest revenue recognized when each semiannual interest payment is received would be recorded as a credit to interest revenue that is equal to $2,500

 

Solution: Interest Revenue = $100,000*0.05

                                           = $5,000 Annually

                                           = $5,000/2

                                           = $2,500 semi-annually