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Doubt on investment accounts

Chintu... (Student) (82 Points)

10 October 2015

(20000*9%*5) / 12

Why 5months taken??

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2 Replies

Chintu... (Student) (82 Points)
Replied 10 October 2015

Anu K S (Cleared CA Final) (195 Points)
Replied 11 October 2015

Chintu, The bond was purchased on 1 st march. However, the next interest accrues only on 31 st march. That means, from the last date of interest(30-sept) to 1st march, the vendor held the bond. Hence interest on the same from 30-sept to 1-mar belongs to him. 20000*9%*5/12=750 The purchase being made on ex-interest, the interest portion is not included in the consideration. Hence interest of rs.750 is to be paid to the vendor. If you still don't get it, simply think in this way...... Purchase date-1 mar Hence on 31 mar, we are the holders of the bond, hence we receive the interest. However we actually held the same only for 1 month(mar). Remaining interest(6-1 months) belongs to the vendor. Hence we compensate him for that at the time of purchase itself.