Jim Company issued P 4,000,000 of 8 ½%, 5- year bonds on March 1,2018. Interest payment dates are March 1 and September 1.With a market interest rate of 9%, the bonds were sold for P 3,926,000. Jim Company retired all of the bonds on September 30,2021 at 101 plus accrued interest. REQUIRED: Determine the following: (a) What is the amount of interest expense and discount amortization that Jim will record on September 1,2018, the first semi- annual interest payment date? (b) What is the carrying amount of the bonds on the December 31, 2019 statement of financial position, after all year-end adjustments are made? (c) What amount of cash was paid for the retirement of bonds and payment of accrued interest on May 31, 2021? (d) What is the gain or loss on retirement of the bonds?
Jim Company issued P 4,000,000 of 8 ½%, 5- year bonds on March 1,2018. Interest payment dates are March 1
and September 1.With a market interest rate of 9%, the bonds were sold for P 3,926,000.
Jim Company retired all of the bonds on September 30,2021 at 101 plus accrued interest.
REQUIRED: Determine the following:
(a) What is the amount of interest expense and discount amortization that Jim will record on September
1,2018, the first semi- annual interest payment date?
(b) What is the carrying amount of the bonds on the December 31, 2019
all year-end adjustments are made?
(c) What amount of cash was paid for the retirement of bonds and payment of accrued interest on May 31,
2021?
(d) What is the gain or loss on retirement of the bonds?
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