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On January 1, 20x6, SAM COMPANY. issued 3-year bonds with a face value of P3,000,000 for P2,850,756. The bonds carry an interest of 8% per year payable annually on December 31. On the date of issuance, the company incurred and paid commission to underwriters of P15,000. The bonds are to be properly classified as financial liabilities at fair value through profit or loss. On December 31, 20x6, the bonds are quoted at 103%. Assume that there are no changes due to credit risk. On January 1, 20x7, the bonds are retired at 104%. How much is the interest expense for 20x6?

On January 1, 20x6, SAM COMPANY. issued 3-year bonds with a face value of P3,000,000 for P2,850,756. The bonds carry an interest of 8% per year payable annually on December 31. On the date of issuance, the company incurred and paid commission to underwriters of P15,000. The bonds are to be properly classified as financial liabilities at fair value through profit or loss. On December 31, 20x6, the bonds are quoted at 103%. Assume that there are no changes due to credit risk. On January 1, 20x7, the bonds are retired at 104%. How much is the interest expense for 20x6?

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 14MC: Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the...
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On January 1, 20x6, SAM COMPANY. issued 3-year bonds with a face value of P3,000,000 for P2,850,756. The bonds carry an interest of 8% per year payable annually on December 31. On the date of issuance, the company incurred and paid commission to underwriters of P15,000. The bonds are to be properly classified as financial liabilities at fair value through profit or loss. On December 31, 20x6, the bonds are quoted at 103%. Assume that there are no changes due to credit risk. On January 1, 20x7, the bonds are retired at 104%. How much is the interest expense for 20x6?
Transcribed Image Text:On January 1, 20x6, SAM COMPANY. issued 3-year bonds with a face value of P3,000,000 for P2,850,756. The bonds carry an interest of 8% per year payable annually on December 31. On the date of issuance, the company incurred and paid commission to underwriters of P15,000. The bonds are to be properly classified as financial liabilities at fair value through profit or loss. On December 31, 20x6, the bonds are quoted at 103%. Assume that there are no changes due to credit risk. On January 1, 20x7, the bonds are retired at 104%. How much is the interest expense for 20x6?
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