USE THE FOLLOWING INFORMATION FOR # 7 Par Value of Bonds Purchased $ 185,000 Sta

ID: 2425929 • Letter: U

Question

USE THE FOLLOWING INFORMATION FOR # 7

Par Value of Bonds Purchased $ 185,000

Stated Interest Rate 6%

Effective Interest Rate 8%

Purchased On 1/1/20X2

Interest Paid Semi-Annual Interest for 1/1 - 6/30 paid on July 1st of current year

Interest for 7/1 - 12/31 paid on January 1st of next year

Years to maturity 5

-These bonds are available for sale

-Use the effective interest method

- The investor corporation has not elected the fair value option of reporting.

- Five year bonds

7.) What is the amount of cash to be received for each interest payment?

7) Amount of cash to be received for each interest payment = 185,000 x 6% x 1/2 = $ 5,550

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