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On January 1, 2019, Zambonga Co. issued 10% three-year P1,000,000. Interests on these bonds are due annually every
year-end.
Required: Provide the necessary journal entry/ies on the date of issuance under the following independent situations:
ILLUSTRATION 2: Write your final on the blank. Place your solution on a separate paper.
Sibugay Corporation is authorized to issue P1,000,000 of five-year bonds dated June 30, 2016 with a stated interest rate of
10%. Interest on the bonds is payable semi-annually on June 30 and December 31. The company uses the effective
interest method. The bonds were sold to yield 8%
Required: Determine the following: (Round off present value factors to four decimal places)
ILLUSTRATION 3: Write your final on the blank. Place your solution on a separate paper.
On March 1, 2018, Samar Co. issued 12% five-year P1,000,000 at 98 including accrued interest. These bonds were dated
January 1, 2018. In addition, interests on these bonds are due annually every December 31, 2018.
Required: Compute for the initial carrying amount of the bonds on March 1, 2018 _______________________.
ILLUSTRATION 4: Write your final on the blank. Place your solution on a separate paper.
Tacloban Corporation is authorized to issue P1,000,000 of five-year bonds dated June 30, 2015 with a stated interest rate
of 10%. Interest on the bonds is payable semi-annually on June 30 and December 31. The company uses the effective
interest rate method. The bonds were sold to yield 8%.
Required: Determine the amount of gain or loss assuming the bonds were retired under the following independent
situations:
On January 1, 2016, Cotabato Co. acquired a machine from Kidapawan Co. In lieu of cash payments, Cotabato gave
Kidapawan a 3-year, P1,200,000, noninterest-bearing note payable due on December 31, 2018. The prevailing rate of
interest for this type of note is 12%.
3. How much is the carrying amount of the note on December 31, 2016?
a. 956,659 c. 1.071,458
b. 1,200,000 d. 800,000
4. How much is the current portion of the note on December 31, 2016?
a. 114,799 c. 1,071,458
b. Nil d. 956,659
5. How much is the noncurrent portion of the note on December 31, 2016?
a. 956,659 c. 1,071,458
b. 114,799 d. Nil
On January 1, 2019, SUBWAY Co. borrowed 10%, 4,000,000 loan from NOWAY Bank. Principal is due on
January 1, 2022 but interests are due annually starting January 1, 2020. SUBWAY Co. was charged by the bank
3% non-refundable loan origination fee representing service fee. How much is the carrying amount of the loan
on initial recognition?
a. 3,947,608 c. 3,880,000
b. 3,840,234 d. 3,720,000
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- Christian D. Larson