On November 1, 2022, Dayrit Corporation purchased P800,000 face value, 10-year, 8% term bonds dated October 1, 2022 for P700,000 to yield 10% plus accrued interest. Interest is receivable every April 1 and October 1. What amount should Dayrit report as interest receivable in its December 31, 2022 balance sheet?
The bonds are issued by a company in order to fulfill its financial needs. These are classified as long-term liabilities and carry a certain percentage of interest. However, the bonds can also be zero interest are issued without any coupon rate.
Calculation of interest receivable:
The interest receivable on December 31, 2022 balance sheet is P16,000.