[nena07]

Ex. 17-121—Investment in debt securities at a discount.
On May 1, 2010, Kirmer Corp. purchased $450,000 of 12% bonds, interest payable on January 1 and July 1, for $422,800 plus accrued interest. The bonds mature on January 1, 2016. Amortization is recorded when interest is received by the straight-line method (by months and round to the nearest dollar). (Assume bonds are available for sale.)


Instructions
(a) Prepare the entry for May 1, 2010.
(b) The bonds are sold on August 1, 2011 for $425,000 plus accrued interest. Prepare all entries required to properly record the sale.


Solution 17-121
(a) Available-for-Sale Securities 422,800
Interest Revenue ($450,000 × .12 × 4/12) 18,000
Cash 440,800

(b) Available-for-Sale Securities ($27,200 ÷ 68 × 1)400
Interest Revenue 400

Cash ($450,000 × .12 × 1/12) 4,500
Interest Revenue 4,500

Cash 425,000
Loss on Sale of Securities 3,800
Available-for-Sale Securities 428,800
$422,800 + [($27,200 ÷ 68)  15]


[B]I would like to know on part B, how to obtain the value of 68?