Question

On january 31, 2024, b corporation issued $700,000 face value, 11% bonds for $700,000 cash. the bonds are dated december 31, 2023, and mature on december 31, 2033. interest will be paid semiannually on june 30 and december 31. what amount of accrued interest payable should b report in its september 30, 2024, balance sheet? multiple choice

O $19,250
O $57,750
O $38,500
O $51,333

Answer 1

The correct answer is option 4.The accrued interest payable that B Corporation should report in its September 30, 2024, balance sheet is $51,333.33.

Step-by-step explanation:

The amount of accrued interest payable that B Corporation should report in its September 30, 2024, balance sheet can be calculated using the formula:

Accrued Interest = Face Value × Annual Interest Rate × Time

For the given bond with a face value of $700,000 and an annual interest rate of 11%, the time period from January 31, 2024, to September 30, 2024, is approximately 8 months.

Using the formula, the accrued interest payable for this period is:

• Accrued Interest = $700,000 × 11% × (8/12)
• Accrued Interest = $700,000 × 0.11 × (2/3)
• Accrued Interest = $51,333.33

Therefore, B Corporation should report an accrued interest payable of $51,333.33 in its September 30, 2024, balance sheet.