Gentleness Company issued P5,000,000 10% bonds on January 1, 2017 with a tenor of 10 years. Interest is payable every January 1 and July 1. The entire issue was sold on April 1, 2017 at 105 plus accrued interest. On April 1, 2022, P2,000,000 of the bond issue was reacquired by the company and retired at 98 plus accrued interest. On June 30, 2022, the remaining bonds were reacquired at 106 plus accrued interest and refunded with an issue of P3,500,000 8% bonds which were sold at 100. Based on the given information and the result of your audit, determine the following (Use straight line method to amortize premium or discount): Total cash received from the sale of P5,000,000 bonds on April 1, 2017. Interest expense in 2017. Carrying amount of bonds payable as of December 31, 2017. Gain or loss on retirement of P2,000,000 bonds on April 1, 2022. Gain or loss on retirement of remaining bonds on June 30, 2022.
Gentleness Company issued P5,000,000 10% bonds on January 1, 2017 with a tenor of 10 years. Interest is payable every January 1 and July 1. The entire issue was sold on April 1, 2017 at 105 plus accrued interest. On April 1, 2022, P2,000,000 of the bond issue was reacquired by the company and retired at 98 plus accrued interest. On June 30, 2022, the remaining bonds were reacquired at 106 plus accrued interest and refunded with an issue of P3,500,000 8% bonds which were sold at 100. Based on the given information and the result of your audit, determine the following (Use straight line method to amortize premium or discount): Total cash received from the sale of P5,000,000 bonds on April 1, 2017. Interest expense in 2017. Carrying amount of bonds payable as of December 31, 2017. Gain or loss on retirement of P2,000,000 bonds on April 1, 2022. Gain or loss on retirement of remaining bonds on June 30, 2022.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 16E
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Gentleness Company issued P5,000,000 10% bonds on January 1, 2017 with a tenor of 10 years. Interest is payable every January 1 and July 1. The entire issue was sold on April 1, 2017 at 105 plus accrued interest.
On April 1, 2022, P2,000,000 of the bond issue was reacquired by the company and retired at 98 plus accrued interest.
On June 30, 2022, the remaining bonds were reacquired at 106 plus accrued interest and refunded with an issue of P3,500,000 8% bonds which were sold at 100.
Based on the given information and the result of your audit, determine the following (Use
- Total cash received from the sale of P5,000,000 bonds on April 1, 2017.
- Interest expense in 2017.
- Carrying amount of bonds payable as of December 31, 2017.
- Gain or loss on retirement of P2,000,000 bonds on April 1, 2022.
- Gain or loss on retirement of remaining bonds on June 30, 2022.
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