Question

Wilke Co. issued at 103 plus accrued interest $4,000,000, 9% bonds. The bonds are dated January 1, 2018, and pay interest semiannually on July 1 and January 1. In addition, Wilke Co. incurred $27,000 of bond issuance costs. Compute the net amount of cash received by Wilke Co. as a result of the issuance of these bonds

Answer 1

The net amount of cash received by WilkeCo. as a result of the issuance of these bonds is $ 4153000.

Step-by-step explanation:

Selling price of the bonds = $ 4000000*103%

= $ 4120000

Accrued interest fro, januaru to february 28 = $ 4000000*9%*2/12

= $ 60000

Net amount received = selling price of the bonds + accrued interest from januaru to february 28 - bond insurance cost

= $ 4120000 + $ 60000 - $27000

= $ 4153000

Therefore, the net amount of cash received by WilkeCo. as a result of the issuance of these bonds is $ 4153000.