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On September 1, 2021, Howell Company purchased 600 of the P1,000 face value, 9% bonds of Ramsey, Incorporated, for P625,000 (an 8% effective interest rate). The bonds, which mature on September 1, 2026, pay interest semiannually on March 1 and September 1. Assuming that Howell uses the effective interest method of amortization and that the bonds are appropriately classified as non-trading, the net carrying value of the bonds should be shown on Howell's December 31, 2021, statement of financial position at   a.) P600,000 b.) P625,000 c.) P622,333 d.) P623,667

On September 1, 2021, Howell Company purchased 600 of the P1,000 face value, 9% bonds of Ramsey, Incorporated, for P625,000 (an 8% effective interest rate). The bonds, which mature on September 1, 2026, pay interest semiannually on March 1 and September 1. Assuming that Howell uses the effective interest method of amortization and that the bonds are appropriately classified as non-trading, the net carrying value of the bonds should be shown on Howell's December 31, 2021, statement of financial position at   a.) P600,000 b.) P625,000 c.) P622,333 d.) P623,667

FINANCIAL ACCOUNTING
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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On September 1, 2021, Howell Company purchased 600 of the P1,000 face value,
9% bonds of Ramsey, Incorporated, for P625,000 (an 8% effective interest rate). The bonds, which mature on September 1, 2026, pay interest semiannually on March 1 and September 1. Assuming that Howell uses the effective interest method of amortization and that the bonds are appropriately classified as non-trading, the net carrying value of the bonds should be shown on Howell's December 31, 2021, statement of financial position at
 
a.) P600,000
b.) P625,000
c.) P622,333
d.) P623,667
 
 
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