91Ó°ÊÓ

Bond is a long-term long which large companies and governments generally use. In bonds, a company can raise amounts from the general public by issuing the bonds on a prefixed interest rate.

In this, the company purchased two types of bonds one is on 8% purchased on 1^st July and 10% interest on 1^st July 2017. Hence, it is clear from the date the interest on the bonds is calculated for the six months

Interest on the 8% interest bonds:

$\begin{array}{c}\mathbf{Interest}\mathbf{=}\mathbf{Purchase}\text{ â¶Ä‰}\mathbf{Price}\mathbf{×}\text{ }\mathbf{Interest}\text{ }\mathbf{Rate}\mathbf{×}\text{ â¶Ä‰}\mathbf{time}\text{ }\mathbf{period}\\ \mathbf{=}\text{ â¶Ä‰}\mathbf{4}\mathbf{,}\mathbf{000}\mathbf{,}\mathbf{000}\mathbf{×}\mathbf{8}\mathbf{\%}\mathbf{×}\frac{1}{2}\\ \mathbf{=}\text{ }\mathbf{160}\mathbf{,}\mathbf{000}\end{array}$

Interest on the 10% interest bond:

$\begin{array}{c}\mathbf{Interest}\mathbf{=}\text{ }\mathbf{Purchase}\text{ }\mathbf{Price}\mathbf{×}\text{ }\mathbf{Interest}\text{ }\mathbf{Rate}\mathbf{×}\mathbf{Time}\text{ }\mathbf{Period}\\ \mathbf{=}\text{ }\mathbf{\$}\mathbf{3}\mathbf{,}\mathbf{500}\mathbf{,}\mathbf{000}\mathbf{×}\mathbf{10}\mathbf{\%}\mathbf{×}\frac{1}{2}\\ \mathbf{=}\text{ }\mathbf{\$}\mathbf{175}\mathbf{,}\mathbf{000}\end{array}$

Hence the amount of revenue shown in the income statement is $335,000.