Aug 1 06- JRS purchases 18 1k 12% bonds maturing on jul 31 07. Interest is due on Jul & Jan 31.
Is this an annuity question? Do I need to find the future value and then calculate for the Aug-Dec 06 period?
2007-11-23 05:30:46 · 2 answers · asked by Vee 1 in Business & Finance ➔ Other - Business & Finance
does that mean it doesnt require any adjustment?
2007-11-23 05:59:34 · update #1
Yes, you require an adjusting entry.
Dec 31
Dr Bonds interest receivable 900
Cr Bonds interest income 900
(being interest calculated as follows : 18,000 x 12% x 5/12
Aug 1 to Dec 31 is 5 mths)
On Jan 31 you should receive $1,080. Your entry:
Dr Cash 1,080
Cr Bonds interest receivable 900
Cr Bonds interest income 180
2007-11-24 18:32:49 · answer #1 · answered by Sandy 7 · 0⤊ 0⤋
No, it is a simple interest accrual.
You should accrue 5 months interest.
2007-11-23 05:35:10 · answer #2 · answered by shipwreck 7 · 0⤊ 0⤋