What is the correct interest expense on the serial notes payable for 2022? ORANGE Corporation reported the following financial liabilities in its December 31, 2021,statement of financial position:4,250,00012%, Serial notes payable8%, Bonds payable10%, Convertible bonds payable2,800,0003,675,000Additional information and audit notes:a. The 12% serial notes payable was a result of a P4,250,000 loan from PNB on April 30, 2021.The loan proceeds amounting to #4,250,000 was debited to Cash and credited to Notes.payable. The loan is payable at the rate of P850,000 plus interest every April 30, starting2022. The first principal and interest payment were made in April 30 of the current year.b. The 8% bonds payable were issued on June 1, 2021 at an 10% yield rate. Interest on the bondswhich shall mature on June 1, 2025 is payable annually every June 1. The company creditedBonds payable at face value. Any difference between the proceeds and the face value wascharged to interest expense. Interest paid on June 1, 2022 was appropriately recorded. OnSeptember 30, 2023, half of the bonds were retired at P1,500,000.c. The 10%, P3,500,000 face value convertible bonds payable were issued on December 31,2021 at 105. The prevailing market rate of interest on similar securities without conversionoption was at 12%. The issuance was recorded as debit to Cash and credit to Bonds payableat P3,675,000. Interest on the bonds which shall mature on December 31, 2024 is payablesemi-annually every December 31 and June 30. Each P1,000 face value bond is convertible to40, P25 par value ordinary shares. On December 31, 2022, P2,000,000 face value bonds wereconverted to ordinary shares.

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What is the correct interest expense on the serial notes payable for 2022?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter16: Retained Earnings And Earnings Per Share

Section: Chapter Questions

Problem 6P

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