Problem 3:On January 1, 2022, Evening Star Corp. issued P5,000,000 of 12% bonds for P6,066,340 due December 31, 2028.Bond issue cost of P25,000 were incurred. Interest on the bonds is payable annually every December 31 startingDecember 31, 2022.The effective interest rate was determined to be 8% after considering the bond issue cost.The bonds are callable at 120 and on December 31, 2025, after the settlement of the 2025 interest, the entity calledP2,000,000 face amount of the bonds and retired them.11. How much is the interest expense for the year 2023?a. 463,890c. 483,307d. 600,000b.473,97212. What is the carrying value of the bonds on December 31, 2024?a. 5,000,000c. 5,662,508b. 5,515,509d. 5,798,61913. How much is the gain or loss on retirement of the bonds on December 31, 2025?a. 180,192 gain on retirementc. 193,796 gain on retirementb. 180,192 loss on retirementd. 193,796 loss on retirement

Given in the question: Face value of bonds = P5,000,000 Bond Coupon Rate = 12% Bonds are issued for…

11. How much is the interest expense for the year 2023? a. 463,890 c. 483,307 d. 600,000 b.473,972 12. What is the carrying value of the bonds on December 31, 2024? a. 5,000,000 c. 5,662,508 d. 5,798,619 b. 5,515,509 13. How much is the gain or loss on retirement of the bonds on December 31, 2025?

11. How much is the interest expense for the year 2023? a. 463,890 c. 483,307 d. 600,000 b.473,972 12. What is the carrying value of the bonds on December 31, 2024? a. 5,000,000 c. 5,662,508 d. 5,798,619 b. 5,515,509 13. How much is the gain or loss on retirement of the bonds on December 31, 2025?

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

Problem 3:
On January 1, 2022, Evening Star Corp. issued P5,000,000 of 12% bonds for P6,066,340 due December 31, 2028.
Bond issue cost of P25,000 were incurred. Interest on the bonds is payable annually every December 31 starting
December 31, 2022.
The effective interest rate was determined to be 8% after considering the bond issue cost.
The bonds are callable at 120 and on December 31, 2025, after the settlement of the 2025 interest, the entity called
P2,000,000 face amount of the bonds and retired them.
11. How much is the interest expense for the year 2023?
a. 463,890
c. 483,307
d. 600,000
b.473,972
12. What is the carrying value of the bonds on December 31, 2024?
a. 5,000,000
c. 5,662,508
b. 5,515,509
d. 5,798,619
13. How much is the gain or loss on retirement of the bonds on December 31, 2025?
a. 180,192 gain on retirement
c. 193,796 gain on retirement
b. 180,192 loss on retirement
d. 193,796 loss on retirement

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