Pedro Co purchased a bond investment in Juan Company. The following are the data pertaining to Pedro’s Investments in Debt Security. Date of purchase: January 1, 2021 Purchase price: P4,200,000 Principal amount: P4,000,000 Cash interest: 5% per annum, payable on December 31 Effective interest: 3.8806% per annum Maturity date: December 31, 2025 Fair value of the bond: December 31, 2021 P4,894,000 December 31, 2022 P4,560,000 The bond was sold on December 31, 2022 at its fair value. If the bonds are held for collection of contractual cash flow and for sale of financial asset, what amount is the carrying value of Investment in 2022?

Pedro Co purchased a bond investment in Juan Company. The following are the data pertaining to Pedro’s Investments in Debt Security. Date of purchase: January 1, 2021 Purchase price: P4,200,000 Principal amount: P4,000,000 Cash interest: 5% per annum, payable on December 31 Effective interest: 3.8806% per annum Maturity date: December 31, 2025 Fair value of the bond: December 31, 2021 P4,894,000 December 31, 2022 P4,560,000 The bond was sold on December 31, 2022 at its fair value. If the bonds are held for collection of contractual cash flow and for sale of financial asset, what amount is the carrying value of Investment in 2022?

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 93PSA

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Pedro Co purchased a bond investment in Juan Company. The following are the data pertaining to Pedro's Investments in Debt Security. Date of purchase: January 1, 2021 Purchase price: P4,200,000 Principal amount: P4,000,000 Cash interest: 5% per annum, payable on December 31 Effective interest: 3.8806% per annum Maturity date: December 31, 2025 Fair value of the bond: December 31, 2021 at 3% rate P4,297,368 December 31, 2022 at 3.5% rate P4,168,098 December 31, 2023 at 4% rate P4,075,444 December 31, 2024 at 4.5% rate P4,019,139 If initially the investment is accounted for as Amortized Cost for two years and then shifted it to Trading Security, what is the adjustment to Income at reclassification date?
Pedro Co purchased a bond investment in Juan Company. The following are the data pertaining to Pedro's Investments in Debt Security. Date of purchase: January 1, 2021 Purchase price: P4,200,000 Principal amount: P4,000,000 Cash interest: 5% per annum, payable on December 31 Effective interest: 3.8806% per annum Maturity date: December 31, 2025 Fair value of the bond: December 31, 2021 at 3% rate P4,297,368 December 31, 2022 at 3.5% rate P4,168,098 December 31, 2023 at 4% rate P4,075,444 December 31, 2024 at 4.5% rate P4,019,139 If initially the investment is accounted for as FVPL for two years and then shifted it to amortized method, what is the carrying value of the Investment at the end of 2023?
Pedro Co purchased a bond investment in Juan Company. The following are the data pertaining to Pedro’s Investments in Debt Security. Date of purchase: January 1, 2021 Purchase price: P4,200,000 Principal amount: P4,000,000 Cash interest: 5% per annum, payable on December 31 Effective interest: 3.8806% per annum Maturity date: December 31, 2025 Fair value of the bond: December 31, 2021 P4,894,000 December 31, 2022 P4,560,000 The bond was sold on December 31, 2022 at its fair value. If the bonds are held for collection of contractual cash flow, what amount is the carrying value of investment in 2024? a. 4,000,000 b. 4,043,102 c. 4,084,594 d. 4,200,000
Pedro Co purchased a bond investment in Juan Company. The following are the data pertaining to Pedro’s Investments in Debt Security. Date of purchase: January 1, 2021 Purchase price: P4,200,000 Principal amount: P4,000,000 Cash interest: 5% per annum, payable on December 31 Effective interest: 3.8806% per annum Maturity date: December 31, 2025 Fair value of the bond: December 31, 2021 P4,894,000 December 31, 2022 P4,560,000 The bond was sold on December 31, 2022 at its fair value. If the bonds are held for trading, the amount of income (loss) recognized in Profit or Loss in 2022?
Pedro Co purchased a bond investment in Juan Company. The following are the data pertaining to Pedro’s Investments in Debt Security. Date of purchase: January 1, 2021 Purchase price: P4,200,000 Principal amount: P4,000,000 Cash interest: 5% per annum, payable on December 31 Effective interest: 3.8806% per annum Maturity date: December 31, 2025 Fair value of the bond: December 31, 2021 P4,894,000 December 31, 2022 P4,560,000 The bond was sold on December 31, 2022 at its fair value. If the bonds are held for trading, the amount of long term investment be presented in the statement of financial position in 2022?
On April 1, 2021 Jay Sy Co. purchased a P200,000 at face value bond investment that will mature on April 1, 2027. Interest on this bond is collectible every April 1 starting 2022, Jay Sy Co. account for this investment based on business model of collecting contractual cash flows and to sell when circumstances warrant. Jay Sy Co. paid other directly attributable cost of P10,160 to acquire the investment. The bond after transaction cost will yield 5% interest. Effective interest at the end of 2021, and 2023 were 3%, and 6%, respectively. While the investment is quoted at 105 on December 31, 2022. Jay Sy Co. reported interest income of P7,881 in 2021 related to this bond, amortization of P1,119 and cumulative balance in other comprehensive income of P19,707 at the end of 2021. How much is the amount of unrealized gain (loss) in its Statement of Comprehensive income for the period ending December 31, 2022?
Requirement 3. Prepare a comprehensive income statement for Thyme Investments for year ended December 31, 2018. Assume net income was $320,000. (Use a minus sign or parentheses to enter a loss.) 2018 Jan. 5 Purchased Vince Company's $525,000 bond at face value. Thyme classified the investment as available-for-sale. The Vince bond pays interest at the annual rate of 6% on June 30 and December 31 and matures on December 31, 2021 Management's intent is to keep the bonds for several years . June 30 Received an interest payment from Vince Dec.31 Received an interest payment from Vince. Dec.31 Adjusted the investment to its current market value of $518.500 .
Pedro Co purchased a bond investment in Juan Company. The following are the data pertaining to Pedro’s Investments in Debt Security. Date of purchase: January 1, 2021 Purchase price: P4,200,000 Principal amount: P4,000,000 Cash interest: 5% per annum, payable on December 31 Effective interest: 3.8806% per annum Maturity date: December 31, 2025 Fair value of the bond: December 31, 2021 P4,894,000 December 31, 2022 P4,560,000 The bond was sold on December 31, 2022 at its fair value. If the bonds are purchased on September 1, 2021 rather than January 2021 and the company still reports on a calendar basis, and the bonds are held for collection of contractual cash flow, what amount is the carrying value of investment in 2024? a. 4,098,425 b. 4,070,763 c. 4,084,594 d. 4,043,102
On April 1, 2021 Jay Sy Co. purchased a P200,000 at face value bond investment that will mature on April 1, 2027. Interest on this bond is collectible every April 1 starting 2022, Jay Sy Co. account for this investment based on business model of collecting contractual cash flows and to sell when circumstances warrant. Jay Sy Co. paid other directly attributable cost of P10,160 to acquire the investment. The bond after transaction cost will yield 5% interest. Effective interest at the end of 2021, and 2023 were 3%, and 6%, respectively. While the investment is quoted at 105 on December 31, 2022. Jay Sy Co. reported interest income of P7,881 in 2021 related to this bond, amortization of P1,119 and cumulative balance in other comprehensive income of P19,707 at the end of 2021. How much is the correct interest income that Jay Sy should report in its Statement of Comprehensive income for the period ending December 31, 2022? How much is the amount of unrealized gain (loss) in its…
Suppose Donahue Brothers purchases $750,000 of 6.5% annual bonds of McPhee Corporation at face value on January 1, 2024. These bonds pay interest on June 30 and December 31 each year. They mature on December 31, 2033 Donahue intends to hold the McPhee bond investment until maturity Read the requirements Requirement 1. Journalize Donahue Brothers' transactions related to the bonds for 2024 (Record debits first, then credits Select the explanation on the last line of the journal entry table) Begin by journalizing Donahue Brothers' investment on January 1, 2024 Date Accounts and Explanation 2024 Jan 1 GETD Next, journalize the receipt of cash interest on June 30, 2024 Accounts and Explanation Date 2024 Jun 30 Journalize the receipt of cash interest on December 31, 2024 Accounts and Explanation Date 2024 Dec 31 Debit Accounts and Explanation Debit Debit Credit Debit Credit Requirement 2. Journalize the entry required on the McPhee bonds maturity date (Assume the last interest paymen has…
Assume bonds payable are amortized using the straight-line amortization method unless stated otherwise. Determining bond prices and interest expense Jones Company is planning to issue 55490,000 of 9%, five-year bonds payable to borrow for a major expansion. The owner, Shane Jones, asks your advice on some related matters. Requirements Answer the following questions: a. At what type of bond price will Jones Company have total interest expense equal to the cash interest payments? b. Under which type of bond price will Jones Company’s total interest expense be greater than the cash interest payments? c. If the market interest rate is 12%, what type of bond price can Jones Company expect tor the bonds? 2. Compute the price of the bonds if the bonds are issued at 89. 3. How much will Jones Company pay in interest each year? How much will Jones Company’s interest expense be for the first year?
On January 1, 2021, Panama Company purchased P3,000,000 face amount, 9% bonds. The bonds were purchased to yield 8% interest. The bonds mature on January 1, 2026, and pay interest annually on December 31. The entity used 2 decimal places for the PVF. If measured at amortized cost, how much is the carrying amount of investment in bonds on December 31, 2021?

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Date of purchase:	January 1, 2021
Purchase price:	P4,200,000
Principal amount:	P4,000,000
Cash interest:	5% per annum, payable on December 31
Effective interest:	3.8806% per annum
Maturity date:	December 31, 2025
Fair value of the bond:
December 31, 2021	P4,894,000
December 31, 2022	P4,560,000
The bond was sold on December 31, 2022 at its fair value.