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Accrued Interest for Investment in Bonds

FINACT-EUYVPG

Pet Special Co. purchased a bond issued by Creativum Co. on 1/1/2015 and planned to hold the bond to the maturity date, which is 1/1/2025. The bond had a face value of \$1,000,000 with stated interest rate 5%. The bond was issued at par and interest was to be paid on 7/1 and 1/1 every year. On 12/31/2015, which of the following is the correct account and amount Pet Special Company should use to recognize for interest from investing in this bond?

A

Cash \$50,000

B

Interest Receivable \$50,000

C

Interest Revenue \$25,000

D

Interest Revenue \$50,000