MAUNLAD Co., issued 12%, P1,000,000, 3-year bonds for P1,103,084 amount on January 1, 2021. Principal payment is due on December 31, 2023 but interest are due annually every year end. In addition, ABC incurred bond issue costs of P53,347. The effective interest rate before adjustment for transaction costs is 8%. 1. What is the initial carrying amount of the bonds on January 1, 2021? 2. Prepare the amortization table using the effective interest method. 3. What is the carrying amount of the bonds on December 31, 2022? 4. Prepare all the necessary journal entries for the year 2020, 2021 and 2022.

MAUNLAD Co., issued 12%, P1,000,000, 3-year bonds for P1,103,084 amount on January 1, 2021. Principal payment is due on December 31, 2023 but interest are due annually every year end. In addition, ABC incurred bond issue costs of P53,347. The effective interest rate before adjustment for transaction costs is 8%. 1. What is the initial carrying amount of the bonds on January 1, 2021? 2. Prepare the amortization table using the effective interest method. 3. What is the carrying amount of the bonds on December 31, 2022? 4. Prepare all the necessary journal entries for the year 2020, 2021 and 2022.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 6PA: Aggies Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1,...

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