Answered: A.) Credit Unrealized Gain on DI at…

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

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 1MC

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On January 02, 2022. Milk Tea Company purchased 8% P1,000,000 face value bonds of Matcha Corporation of P922.768 and designated as at fair value through profit or loss (FVTPL) Transaction costs incurred by Milk Tea Company relative to the acquisition is P30,000. These bonds mature on December 31, 2026. The bonds were purchased to yield 10%. Interest is payable semi annually every June 30 and December 31. On December 31, 2022, the bonds are quoted 99 while on December 31, 2023, the bonds are quoted @ 102. On April 30, 2024, Milk Tea Company sold P600,000 face value bonds @ 101 plus accrued interest Which of the following is part of the entries of Milk Tea Company to be recognized in 2022? A.) Credit Unrealized Gain on DI at FVTPL - 37,232 B.) Credit Cash - 952,768 C.) Debit Debt Investment at FVTPL - 952,768 D.) Credit Interest Revenue - 73,821.44

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