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On January 1, 2021, purchased $100,000 of Anand Company bonds at face value. The Anand bonds pay 6% coupon rate. On the purchase date, the market interest rate was 6% for bonds of similar risk and maturity. The bonds pay interest semiannually on June 30 and December 31 of each year. Rupar accounts for the bonds as a held-to-maturity investment, and uses the effective interest method. On June 30, 2021, Rupar would record a credit to interest revenue of:

Respuesta :

Parrain

Answer: $3,000

Explanation:

On June 30, 2021, Rupar would have held the bond for 6 months. The coupon rate is an annual figure and so must be translated to a semi annual figure.

To do that simy divide by 2.

= 6% /2

= 3%.

The bond is paid interest on at face value as well.

Therefore the interest on June 30 is,

= 100,000 * 3%

= $3,000

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