On July 1, 2005, Howe Corp. issued 300 of its 10%, $1,000 bonds at 99 plus accrued interest.
The bonds are dated April 1, 2005 and mature on April 1, 2015. Interest is payable semiannually on April 1 and October 1.
What amount did Howe receive from the bond issuance?

So we used 300 issued * 10%*10years as Accrued interest, and are we using 1000 bonds time 99, I am kind of confuse.
Can you explain it how to do it

This is exactly why I said you needed to start with something simple and work your way towards the other problems. You're jumping into the middle when you don't know how to do the basics.

Before you do anything else, you are issuing 300 $1000 bonds. i.e. the bonds are $1000 EACH and you're issuing 300 of them. So you need to start with figuring out how much in total is being issued - what's the total face value of these all put together? It's not doing any good to deal with other numbers until you know the total face of what's being issued. (You aren't going to make an entry for one bond at a time.)

"At 99" means 99% of the face value. That is the amount they were issued for, forgetting the interest part of it. Deal with the interest as a separate issue and then put them together when you get done, because the 99% and the interest have nothing to do with each other. Because they're being issued at an amount less than face value, it's a discount. They will receive 99% of the bond face value, and the difference is recorded as a discount, and the face value goes into the bond payable account.


300 issued * 10%*10years

Let's see if I can explain why this makes zero sense. First of all, you have 300 bonds, not $300. i.e. you have 300 pieces of paper representing a $1000 bond each. You aren't going to pay interest on 300 pieces of paper. You're paying interest on the bonds. So 300 * 10% means nothing.

So fix that first. You need that bond face value. That's what you pay interest on. Bonds are essentially just a loan from an investor instead of a bank. Like you can buy a bond and you're lending the company money and you get interest for doing so. From the company point of view, it's a liability, something they're borrowing and something they owe. They owe the face value, so the face value is the bond payable. That's also what they pay interest on. But there's 300 of them so you need that total before you can do this.

Also, interest is always quoted at an annual rate unless otherwise stated. So if you take 10% of something for interest and then multiply by 10 years, you're getting 10 years worth of interest! Granted, that's what they'll pay, in total, once the 10 years is up. But that isn't what they're asking. Problems rarely ask for the total interest over the life of the bonds. They're asking for accrued interest, and you're not accruing 10 years of interest.

You're trying to accrue interest for a period, not figure out the total for 10 years. I will explain why this accrued interest thing is done, followed by how to do it. Interest can be accrued for different reasons. You're probably more used to the idea of accruing something at year-end as an adjusting entry. Yup, that'll need done as well, but that's not what this is. If you don't understand the why behind this, just skip to the how part.

The interest is paid on April 1 and October 1, every six months. But they're being sold smack in the middle of that, on July 1. When October 1 comes around, an entire six months of interest will be paid to everyone. As for why this is done, I'll just say cause it's just easier for the company. (Even though it adds this extra bit to the entry.) But if they pay an entire six months, they're paying from April 1 to October 1 when the bonds weren't "out there" for that long. They've only been "out there" for three months. (July, Aug, Sept) So they really should only have an expense for 3 months. So what happens is the people buying the bonds actually pay them for the first three months (April, May, June) up front, and it's due back to them. So they pay 3 months to the company. Later the company pays them the entire six months. So three months is merely being paid back, and the other three actually count as the expense.

If that makes no sense, just remember that you have to accrue interest from the last payment date (April 1) to the issuance date (July 1), three months. Use the basic principal x rate x time. The principle is the face value (NOT the # of bonds), you have the rate, and time is not the number of years, because they aren't accruing 10 years of interest! They're accruing only 3 months.

So in addition to the issuance value (using the 99%), they will also get that accrued interest you just figure out. But those are two individual calculations.

See what you can do with that. You really should learn how to just do a bond at a discount before jumping into adding accrued interest, but try it.