On January 1, 20x1, Company A issues bonds with face amount of P5,000,000 for P5,773,129. The bonds mature on December 31, 20x3 and pay annual interest of 14%. The effective interest rate is 8%. Requirement: Prepare all the journal entries during the term of the bonds. Given: Amortization Table Date Interest payment (5,000,000 * 14%) Interest expense (Carrying value * 8%) Premium amortized Carrying value of bonds payable Jan 1, 20x1 P5,773,129 Dec 31, 20x1 P700,000 P461,850 P238,150 P5,534,979 Dec 31, 20x2 P700,000 P442,798 P257,202 P5,277,777 Dec 31, 20x3 P700,000 P422,223 P277,777 P5,000,000 Total P773,129

On January 1, 20x1, Company A issues bonds with face amount of P5,000,000 for P5,773,129. The bonds mature on December 31, 20x3 and pay annual interest of 14%. The effective interest rate is 8%. Requirement: Prepare all the journal entries during the term of the bonds. Given: Amortization Table Date Interest payment (5,000,000 * 14%) Interest expense (Carrying value * 8%) Premium amortized Carrying value of bonds payable Jan 1, 20x1 P5,773,129 Dec 31, 20x1 P700,000 P461,850 P238,150 P5,534,979 Dec 31, 20x2 P700,000 P442,798 P257,202 P5,277,777 Dec 31, 20x3 P700,000 P422,223 P277,777 P5,000,000 Total P773,129

College Accounting, Chapters 1-27

23rd Edition

ISBN:9781337794756

Author:HEINTZ, James A.

Publisher:HEINTZ, James A.

Chapter22: Corporations: Bonds

Section: Chapter Questions

Problem 2CE

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Date	Interest payment (5,000,000 * 14%)	Interest expense (Carrying value * 8%)	Premium amortized	Carrying value of bonds payable
Jan 1, 20x1				P5,773,129
Dec 31, 20x1	P700,000	P461,850	P238,150	P5,534,979
Dec 31, 20x2	P700,000	P442,798	P257,202	P5,277,777
Dec 31, 20x3	P700,000	P422,223	P277,777	P5,000,000
Total			P773,129