d.None of the above.18. On July 1, 2020, Morales Corp. acquired P4,000,000face value of X Corporation bonds with a nominal rateof interest of 4%. The bonds mature on July 1, 2025and pay interest semi-annually each July 1 andJanuary 1, with the first interest payment due onJanuary 1, 2021. The bonds are held for collection. Atthe date of issuance the bonds had a market rate ofinterest of 6%. On December 31, 2020, the marketvalue of the bonds was P3,700,000. The amount to berecognized in 2020 profit or loss related to the bondinvestment isа. Р109,764b. P109,896c. P219,529d. P219,791

Income on bond: To find out how much money was spent in total interest on a bond, you multiply its…

Answered: 18. On July 1, 2020, Morales Corp.…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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On March 1, 2020, Jagger Metal Corp. issued 8.0% bonds dated January 1, 2020. The bonds have a $900,000 par value, mature in 20 years, and pay interest semiannually on June 30 and December 31. The bonds were sold to investors at their par value plus the two months’ interest that had accrued since the original issue date.a. How much accrued interest was paid to Jagger by the purchasers of these bonds on March 1, 2020? (Round the final answer to the nearest whole dollar.) b. Prepare the journal entries that Jagger would make to record: (1) the issuance of the bonds on March 1, 2020; (2) the first interest payment on June 30, 2020; and (3) the second interest payment on December 31, 2020. Record the bonds issue, with two months' accrued interest. (March 1, 2020) Record the semi-annual interest paid on the bonds. (June 30, 2020) Record the semi-annual interest paid on the bonds. (December 31, 2020) Please show step by steps where you got all the numbers from.
On June 1, 2019, Leni Company acquired a 5-year, 10%, P1,000,000 face value bonds for P920,000. The company paid broker’s fees amounting to P118,896. As a result, yield rate on the bond was 9%. Interests are collectible annually every May 31. The bonds were selling at 120, 105, 98 as of December 31, 2019, December 31, 2020 and December 31, 2021, respectively. The company classified the investment as Fair Value through Profit or Loss. How much is the interest income that should be recognized for the year ended December 31, 2020?
On January 1, 2018, HI company purchased P1,000,000, 12% bonds for P1,063,394, a price that yields 10%. Interest on these bonds is payable every December 31. On April 1, 2020, HI sold P600,000 face value bonds at 101 plus accrued interest. The debt investment is designated as at FVPL. The market value of the bonds were: Dec. 31, 2018-P108; Dec.31, 2019 - P106; Dec. 31, 2020 –P104. How much is the interest income for year 2018?
On January 1, 2023, Teal Corporation purchased a newly issued $1,425,000 bond. The bond matured on December 31, 2025, and paid interest at 6% every June 30 and December 31. The market interest rate was 8%. Teal's fiscal year-end is October 31, and the company had the intention and ability to hold the bond until its maturity date. The bond will be accounted using the amortized cost model. Click here to view Table A.2 - PRESENT VALUE OF 1- (PRESENT VALUE OF A SINGLE SUM) Click here to view Table A.4 - PRESENT VALUE OF AN ORDINARY ANNUITY OF 1 (a) X Your answer is incorrect. Calculate the price paid for the bond using a financial calculator or Excel functions. (Round answers to 2 decimal places, e.g. 52.75.) PV $ -1062917.95 4
On January 1, 2018, Rei Company obtained $4,000,000 of 12% face value bonds at $3,767,000 to be held financial assets at amortized cost with a 14% effective yield. Interest on bonds is payable annually on December 31 and bonds mature on January 1, 2022. The effective interest method of amortization is used. The quoted price of the bonds is as follows: December 31, 2018: 97 December 31, 2019: 98 June 30, 2020: 99.a. What amount will be recognized as income on the 2018 income statement?b. What amount will be the gain (loss) on sale assuming all the bonds were sold on June 30, 2020 at 99 plus accrued interest?c. How much is the carrying amount of investment on December 31, 2018?
On January 1, 2020, Kendall Co. purchased to hold to maturity, 1000, $1,000, 9% bonds for a price to yield an effective interest rate of 10% . Interest is paid semiannually on December 31 and June 30 and the bonds mature on December 31, 2023. What price did Kendall Company pay for this bond?
You invest $ 4,060 in an account today. You make no additional deposits into the account. One year from today there is $ 5,140 in the account. What is the nominal interest rate that you earned on your money? (Record your answer as a percent rounded to 1 decimal place; for example, record .527945 = 52.8% as 52.8). Your Answer:
On January 1, 2020, Lucas Company purchased P1,200,000, 14% bonds of Andres Company for P1,381,934, a price that yields 10%. Interest on these bonds is payable every December 31. The bonds mature on December 31, 2024. Market value of the bonds on different dates is as follows: December 31, 2020 112 December 31, 2021 108 December 31, 2022 105 Assume that the company intended to collect the principal and interest over the term of the bonds and did not choose the fair value option. At what amount should the bond investments be shown on December 31, 2020 statement of financial position?Required to answer. Single choice.
On January 1, 2019, Toni Corporation issued 3,000 of its 9%, P1,000 bonds when the prevailing market rate of interest was 8%. Interest is payable annually every January 1. The bonds mature on January 1, 2024. Toni paid a transaction cost of P24,460 in relation to the issuance of bonds and in effect the yield rate is 8.2%. Toni uses the effective method of amortization. Present value of 1 at 8.2% for 3 periods .78944 .79383 Present value of 1 at 8% for 3 periods Present value of annuity at 8.2% for 3 periods 2.56782 Present value of annuity at 8% for 3 periods 2.57710 38. On December 31, 2020 statement of financial position, how much would be shown as the carrying amount of the bonds payable? a. P3,022,181 b. P3,042,681 c. P3,061,631 d. P3,077,314 39. What is the balance of unamortized transaction cost or bond issue cost as of December 31, 2020? a. P5,598 b. P10,818 c. P15,676 d. P20,226
On January 1, 2020, Naples Co. issued $280,000 of 10-year bonds at 96. The bonds pay 6% cash interest annually on December 31. The company retired 30% of the bonds on June 1, 2020, when the bonds were selling at 90 plus accrued interest. Assume the straight-line interest method is used to amortize the bond discount. What is the gain recognized on the redemption of the bonds? Select one: a. $5,208 gain b. $8,400 gain c. $5,040 gain d. $5,180 gain

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