b. 12,54512,545d. 16,315onds5. On July 1, 2003, East Co. purchased, as a long-terminvestment, P500,000 face amount, 8% bonds of Rand Corp. forP461,500 to yield 10% per vear. The bonds pay interestsemiannuallybalance sheet, East should report interest receivable orXorkon January 1 and July 1. In its December 31, 2005Yorka. 18,460b. 20,000c. 23,075d. 25,000(AICPA)006. Cap Corp. reported accrued investment interest rečeivable ofP38,000 and P46,500 at January 1 and December 31, 2003,respectively. During 2003,investments included the following:Capital gains distributions10%,cash collections from thearredctiveInterest000,spunoWhat amount should Cap report as interest revenue frominvestments for 2003?a. 160,500b. 153,500c. 152,000d. 143,500(AICPA)A capital gains distribution is a payment by a mutual fund or an exchange-traded fund (ETF) of a portion of themeeds from the fund's sales of stocks and other assets. It is the investor's share of the proceeds from the fund'sransactions." (www.investopedia.com)-AO Hint: T-accountSuLhUse the following information for the next four questions:On Jan. 1, 20x1, Red Co. acquires P500,000 face amount, 10%,heldbonds of Ball Co. for P487,656. Red Co. incurred transaction costsequal to 5% of the face amount of the bonds. The bonds mature onwere quoted at 102 and 104 on Dec. 31, 20x1 and Dec. 31, 20x2,Espectively.Dec. 31, 20x3 and pay annual interest every Dec. 31. The bonds, What is the effective interest rate on the bonds and how muchIs the difference between the interest received and the interestincome recognized in 20x2?a. 9%;3,861c. 14%; 5,389 uses the effective interest method of amortization. In itsDecember 31, 2003 balance sheet, what amount should Yorkreport as investment in bonds?a. 911,300b. 916,600c. 953,300d. 960,600(AICPA)Use the following information for the next three questions:On Jan. 1, 20x1, Koong Co. acquired 100, P5,000 face amount, 10%,3-year 'term' bonds of King Co. for P428,567. Koong incurredtransaction costs of P25,000 on the acquisition. The effectiveinterest rate adjusted for the transaction costs is 14%. The bondswere quoted at 102 on Dec. 31, 20x2.2. How much are the interest income in 20x2 and the carryingamount of the bonds on Dec. 31, 20x2 if the bonds are heldunder a “hold to collect" business model?a. 65,389; 482,455b. 65,389; 510,000c. 55,276; 472,834d. 50,000; 453,5673. How much are the interest income in 20x2 and the carryingamount of the bonds on Dec. 31, 20x2 if the bonds are heldunder a “hold to collect and sell" business model?a. 65,389; 482,455c. 50,000; 428,567d. 50,000; 510,000b. 65,389; 510,0004. What amount of gain (loss) is recognized if the bonds weresold on Jan. 3, 20x3 at 102, transaction costs of P15,000 wereincurred on the sale, and the bonds were classified as:FVOCIAmortized costAmortized costFVOCIa. 12,545c. 12,54501

Hi student Since there are multiple questions, we will answer only first question.

(15,000) investment, P500,000 face amount, 8% bonds of Rand Corp. for d. 16,315 P461,500 to yield 10% per year. The bonds pay interest 5. On July 1, 2003, East Co. purchased, as a long-terni investment, P500,000 face amount, 8% bonds of Rand Corp. for P461,500 to yield 10% per vear. The bonds pay interest semiannually on January 1 and July 1. In its December 31, 2005 balance sheet, East should report interest receivable of a. 18,460 b. 20,000 c. 23,075 d. 25,000 (AICPA)

(15,000) investment, P500,000 face amount, 8% bonds of Rand Corp. for d. 16,315 P461,500 to yield 10% per year. The bonds pay interest 5. On July 1, 2003, East Co. purchased, as a long-terni investment, P500,000 face amount, 8% bonds of Rand Corp. for P461,500 to yield 10% per vear. The bonds pay interest semiannually on January 1 and July 1. In its December 31, 2005 balance sheet, East should report interest receivable of a. 18,460 b. 20,000 c. 23,075 d. 25,000 (AICPA)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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