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Chapter 5- bonds payable Problem 5-9 (P) Problem 5-10 (P) Problem 5-11 (P) Problem 5-12 (P) Problem 5-13 (P) Problem 5-14 (P) Problem 5-15 (P) Problem 5-16 (P) Problem 5-17 (P) Problem 5-18 (P) Problem 5-19 (P) Problem 5-20 (P) Problem 5-21 (P)Chapter 6 – Efecive interest method Problem 6-13 (P. 230...

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Chapter 5- bonds payable Problem 5-9 (P.189) Problem 5-10 (P.189) Problem 5-11 (P.190) Problem 5-12 (P.190) Problem 5-13 (P.191) Problem 5-14 (P.191) Problem 5-15 (P.191) Problem 5-16 (P.192) Problem 5-17 (P.192) Problem 5-18 (P.192) Problem 5-19 (P.193) Problem 5-20 (P.193) Problem 5-21 (P.193)

Chapter 6 – Effective interest method Problem 6-13 (P. 230) Marsh Company The entity used the effective interest method of amortizing bond discount. Interest is payable semiannually on January 1 and July 1. For six months ended June 30, 2020, what amount should be reported as bond interest expense?

Problem 6-14 (P. 230) On July 1, 2020, Tara Company issued 4,000 bonds of 8%, P1,000 face amount for P3,504,000. The bonds were issued to yield 10%. The bonds are dated July 1, 2020 and mature on July 1, 2029. Interest payable semiannually on January 1 and July 1. What amount of the bond discount should be amortized for the six months ended December 31, 2020?

Problem 6-15 (P. 230) Moon Company issued 10% bonds payable in the face amount of P4,500,000. The bonds mature on January 1, 2030.

For the six months ended June 30, 2020, what amount should be reported as bond interest expense?

Problem 6-16 (P. 231) Ward Company issued 9% bonds with face amount of P4,000,000 which mature on January 1, 2030. The bonds were issued for P3,756,000 to yield 10%, resulting in bond discount of P244,000. The entity used the interest method of amortizing bond discount. Interest is payable annually on December 31. 1. On December 31, 2020, what iss the balance of the discount on bonds payable? 2. What is the carrying amount of bonds payable on December?

Problem 6-17 (P. 231) Wolf Company issued 10% bonds in the face amount

Problem 6-18 (P. 232)

Problem 6-19 (P. 232)

Problem 6-20 (P. 233)

Problem 6-21 (P. 233)

Problem 6-22 (P. 234)

Problem 6-23 (P. 234)

Problem 6-24 (P. 235)

Problem 6-25 (P. 235)

Problem 6-26 (P. 236) Problem 6-27 (P. 236)

Chapter 7 – Compound Financial Instrument

Problem 7-9 (P. 264) At the beginning of current year, Fence Company issued 12% P5,000,000 non convertible bonds at 103 which are due in 5 years. On the date of issuance, the market value of the share was P40 and the market value of the warrant was P4. 1. What amount should be recognized as discount or premium on the original issuance of the bonds> - 342,000 discount 2. What is the equity component arising from the issuance of bonds payable? - 492,000\ 3. What amount is credited to share premium if all of the share warrants are exercised?

-

4,242,000

Problem 7-10 (P. 265) Moses company issued P5,000,000 face amount, 5-year bonds at 109. Each P1,000 bond was issued with 10 share warrants, each of which entitled the bondholder to purchase one share of P100 par value at P120. Immediately after issuance, the market value of each warrant was P5. However, the prevailing market rate of interest for similar bonds without warrants is 12%. 1. 2. 3. 4.

What is the carrying amount of the bonds payable on the date of issuance? What amount should be recorded initially as discount or premium on bonds payable? What is the equity component arising from the issuance of bonds payable? What amount is credited to share premium if all of the share warrants are exercised?

Problem 7-11 (P. 266) At the beginning of current year, Case Company issued P5,000,000 of 12% nonconvertible bonds payable at 103 which are due in five years. In addition, On the date of issuance, the quoted market value of each warrant was P4. The market value of the bonds ex-warrants at the time of issuance is 95. 1. What is the carrying amount of the bonds payable on the date of issuance? 2. What amount of the proceeds from the bond issue should be recognized as an increase in sharehlders’ equity? 3. What amount is credited to share premium if all of the share warrants are exercised?

Problem 7-12 (P. 267) Moriones Company issued face amount 12% 5-year convertible bonds at 110 at the beginning of current year, paying interest semiannually on January 1 and July 1. What is the increase in shareholders’ equity arising from the original issuance of the convertible bonds?

Problem 7-13 (P. 267) At the beginning of current year, Susan Company issued 5,000 convertible bonds. The bonds have a three-year term and are issued at 110 with a face amount og P1,000 per bond. Interest is payable annually in arrears at a nominal 6% interest rate. What is the equity component arising from the original issuance of the convertible bonds?

Problem 7-14 (P. 268)

On December 31, 2020, Cey Company had outstanding 12% P5,000,000 face amount convertible bonds maturing on December 31, 2025. Interest is payable on June 30 and December 31. At

Problem 7-15 (P. 268) Spare Company had an outstading share capital with par value of P50,000,000 and a 12% convertible bond issue in the face amount of P10,000,000. Interest payment dates of the bond issue are June 30 and December 31. What amount of share premium should be recognized by reason of the conversion of bonds payable into share capital?

Problem 7-16 (P. 269) Clay company had P600,000 convertible 8% bonds payable outstanding on June 30. Each P1,000 bond was convertible into 10 ordinary shares of P50 par value. The unamortized premium on these bonds was P12,000 at the date of conversation. No equity component was recognized when the bonds were originally issued. What is the increase in share premium as a result of the bond conversion?

Problem 7-17 (P.269)

Problem 7-18 (P. 270) On December 31, 2020, Tamia Company showed the followig balances: Bonds payable – 6% Discount on bonds payable Share premium – conversion privilege The interest is payable annually every December 31. The convertible bonds are not converted but fully paid on December 31, 2020. However, the quoted price of the bonds without the conversion privilege is 95.

Chapter 8- Note Payable

Problem 8-10 (P.293) Joshua Company bought a new machine and agreed to pay in equal annual installment of P600,000 at the end of each of the next five years. The preventing interest rate for this type of transaction is 12%. 1.. What amount should be reported as note payable if financial statements were prepared today? - 2,160,000 2. What is the interest expense for the first year? - 259,200

Problem 8-11 (P.293) Mann Company reported a 10% note payable of P3,600,000 on June 30, 2020. The note is dated October 1, 2018 and payable in three equal annual payments of P1,200,000 plus interest. On june 30,2020 what amount should be reported as accrued interest payable for this note? -

180,000

Problem 8-12 (P.294) On December 31, 2020, Bart company purchased a machine from Fell company in exchange for a noninterest bearing note requiring eight payments of P200,000. On December 31, 2020, what is the carrying amount of the note payable? -

942,400

Problem 8-13 (P.294) At the beginning of current year, Pares company borrowed P3,600,000 from a major customer evidenced by a noninterest bearing note due in three years.

The entity agreed to supply the customer’s inventory needs for the loan period at an amount lower than market price. What amount of interest expense should be reported in the income statement for the current year?

Problem 8-14 (P.295) At year-end, Roth company issued a P1,000,000 face amount note payable in exchange for services rendered. The note, made at usual trade terms, is due in nine months and bears interest, payable at maturity, at the annual rate of 3%. At what amount should the note payable be reported at year-end? -1,000,000

Problem 8-15 (P.295) On September 1, 2019, Pine company issued a note payable in the amount of P1,800,000, bearing interest at 12%, and payable in three equal annual principal paymenrs if P600,00. On this date, the prime rate was 11%. On December 31,2020, what amount should be reported as accrued interest payable? -48,000

Problem 8-16 (P. 295) On March 1, 2019, Alpha company borrowed P1,000,000 and signed a 2-year note bearing interest at 12% per annum compounded annually. Interest is payable in full at maturity on February 28, 2021. What amount should be reported as accrued interest payable on December 31, 2020? -

232,000

Problem 8-17 (P.296) On January 1, 2020, Solemn company sold land to Glory company. There was no established market price for the land. The note has no ready market. The prevailling rate of interest for a note of this type is 10%. What is the carrying amount of the note payable on December 31, 2020? -

1,388,560

Problem 8-18(P.296)

On January 1, 2020, Easy Company reported a note payable of P1,200,000. The notes is dated October 1, 2019, bears interest at 15% and is payable in three equal annual payments of P400,000. What amount should be reported as accrued interest expense for2020?

Problem 8-19 (P. 297) Loob company frequently borrowed rom the bank in order to maintain sufficient operating cash. The loans were at a 12% interest rate, with interest payable at maturity. If no correction is made, by what amount would interest expense for 2020 be understated?

Problem 8-20

Problem 8-21(P. 298) On july 1, 2020, Justine Company borrowed P1,000,000 on a 10% five-year interest-bearing note. The entity irrevocably elected the fair value option in measuring the note payable. 1. What is the interest expense for 2020 - 50,000 2. What is the carrying amount of the note payable on December 31, 2020?

- 975,000 3. What amount should be reported as gain from change in fair value of the note payable for 2020? - 25,000

Problem 8-22 (P. 299) On January 1, 2020, Jonathan company borrowed P500,000 8% note due in four years, The present value of the note on the date of issuance was P367,500. The entity elected irrevocably the fair value option in measuring the note payable. 1. 2. 3. 4.

What is the carrying amount of the note payable on December 31, 2020? What amount should be reported as interest expense for 2020? What amount of gain from change in fir value of the note payable should be reported for 2020? At what amount should the discount on note payable be presented on December 31, 2020?

Chapter 9 – Debt Restructure

Problem 9-13 (P.324) Hull company is in debited to Apex company under a P5,000,000, 12%, three- year note dated December 31, 2018. What amount of pretax gain on extinguishment should Hull company report as component of income from continuing operations in 2020?

Problem 9-14 The following information pertains to the transfer of real estate pursuant to a debt restricting by Knob company to Mene Company in full liquidation of Knob company’s liability to Mene Company. What amount of pretax gain on extinguishment should Knob Company report as component of income from continuing operations?

Problem 9-15 (P. 325) During 2020, Mann Company experienced financial difficulties and is likely to default on a P5,000,000, 15% three-year note dated January 1, 2018 payable to summit bank. What amount should be reported as gain from extinguishment of debt in the 2020 income statement?

Problem 9-16 (P.325) Due to extreme financial difficulties, Armada Company had negotiated a restructing of a 10% P5,000,000 note payable due on December 31, 2020. The unpaid interest on the note on such date was P500,000. The present value of 1 at 10% for three periods is 0.75 and the resent value of an ordinary annuity of 1 at 10% for three periods is 2.49 1. What is the gain on extinguishment for 2020? - 1,703,200

2. What is the interest expense for 2021? - 379,680 problem 9-17 (P.326) Due to adverse economic circumstances and poor management, Tagaytay Highlands company had negotiated a restricting of a 9% P6,000,000 note payable to Second bank due on January 1, 2020. There was no accrued interest on the note on January 1, 2020. 1. What is the present value of the new note payable on January 1, 2020? - 5,494,500 2. What is the gain on modification of debt to be recognized for 2020? - 505,500 3. What is the interest expense for 2020 as a result of the modification? - 494,505 Problem 9-18 (P.327)

On January 1, 2020, Granada Company had an overdue 10% note payable to First Bank at P8,000,000 and accrued interest of P800,000. As a result of a restricting agreement on January 1, 2020, First bank agreed to the following provisions: The principal obligation is reduced to P6,000,000

1. What is the present value of the new note payable on January 1, 2020? - 6,380,400 2. What is the gain on extinguishment of debt to be recognized for 2020? - 2,419,600 3. What is the interest expense to be recognized for 2020? - 638,040...