What is accrued interest?

Accrued interest is the interest that accumulates on a bond between coupon payment dates. When a bond is bought or sold, the buyer compensates the seller for the interest that has accrued during this period.

Accrued Interest = (Coupon Payment * Days Since Last Payment) / Days in Coupon Period

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Estimated Accrued Interest Payable

A buyer is required to pay the accrued interest to the bondholder (seller).

Estimated Accrued Interest Receivable

A seller is supposed to receive the accrued interest from the buyer.