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On Janury 1, 20x1, an entity issues bonds with face amount of P8,000,000 for P8,600,000. The bonds mature on December 31, 20x4 and pay annual interest of 11% every December 31. The entity incurs transactions costs of P81,645. The effective interest rate adjusted for transaction costs is 9%.    Requirement:  Prepare all the journal entries during the term of the bonds.   Other Given values:  Initial carrying amount of bonds = P8,518,355 Net premium from the issuance on initial recognition = P518,355 Periodic interest payment = P880,000 periodic interest expense = P766,382

On Janury 1, 20x1, an entity issues bonds with face amount of P8,000,000 for P8,600,000. The bonds mature on December 31, 20x4 and pay annual interest of 11% every December 31. The entity incurs transactions costs of P81,645. The effective interest rate adjusted for transaction costs is 9%.    Requirement:  Prepare all the journal entries during the term of the bonds.   Other Given values:  Initial carrying amount of bonds = P8,518,355 Net premium from the issuance on initial recognition = P518,355 Periodic interest payment = P880,000 periodic interest expense = P766,382

College Accounting, Chapters 1-27
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter22: Corporations: Bonds
Section: Chapter Questions
Problem 3MC
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On Janury 1, 20x1, an entity issues bonds with face amount of P8,000,000 for P8,600,000. The bonds mature on December 31, 20x4 and pay annual interest of 11% every December 31. The entity incurs transactions costs of P81,645. The effective interest rate adjusted for transaction costs is 9%. 

 

Requirement:  Prepare all the journal entries during the term of the bonds.

 

Other Given values: 

  • Initial carrying amount of bonds = P8,518,355
  • Net premium from the issuance on initial recognition = P518,355
  • Periodic interest payment = P880,000
  • periodic interest expense = P766,382
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