Farmer Company issues 20,000,000 of 10 year, 9 % bonds on March 1, 2012 @ 97 plus accrued interest

| March 31, 2017

Question
Farmer Company issues 20,000,000 of 10 year, 9 % bonds on March 1, 2012 @ 97 plus accrued interest. The bonds are dated Jan 1, 2012 and pay interest on June 30, and December 31. What is the total cash received on the issue date?

First journal entry would be:

Cash debit $19,400,000 ($20,000,000 X .97 X 6/12)

Discount on Bond Payable debit $600,000

Bond Payable credit $20,000,000 (face value of the bond)

2nd entry is to determine the interest accrued from March 1. This is where I’m having trouble:

Bond Interest Expense debit $330,000

Discount On Bond Payable credit $30,000 (600,000 /20)

Cash credit $300,000 ($20,000,000 X .09 X 2/12)

So the answer I got for this would be $19,730,000. The book says the answer is $19,700,000. I’m obviously doing something wrong in the second journal entry but I can’t figure it out. please explain.

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