1. What is the carrying amount of the bonds payable on December 31,2020?A. 5,450,000B. 4,830,000C. 5,000,000D. 4,380,000E. None of the above Items 1 to 4 are based on the following information.On December 31, 2020, Fuslie Company issued P5,000,000 face amount, 5-year bonds at 109. Each P1,000 bondwas issued with 10 share warrants, each of which entitled the bondholder to purchase one share of P100 par valueat P120. Immediately after issuance, the market value of each warrant was P5.The stated interest rate on the bonds is 11% payable annually, every December 31. However, the prevailingmarket rate of interest for similar bonds without warrants is 12%.Note: Round-off present value factors to two (2) decimal places.

Bonds payable is one of the form of liability being incurred in business, on which regular interest…

Answered: 1. What is the carrying amount of the…

1. What is the carrying amount of the bonds payable on December 31,2020? A. 5,450,000 B. 4,830,000 C. 5,000,000 D. 4,380,000 E. None of the above

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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Question

1. What is the carrying amount of the bonds payable on December 31,2020? A. 5,450,000 B. 4,830,000 C. 5,000,000 D. 4,380,000 E. None of the above

Items 1 to 4 are based on the following information.
On December 31, 2020, Fuslie 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.
The stated interest rate on the bonds is 11% payable annually, every December 31. However, the prevailing
market rate of interest for similar bonds without warrants is 12%.
Note: Round-off present value factors to two (2) decimal places.

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