Bond that does not coincide with the reporting period On April 1, 2023, ACT Company issued a 3-year, P3,000,000 face value bonds with a stated rate of 10% for P 2,852,480.27 The effective interest rate for similar bonds is 12%. Interest on the bonds is payable semi- annually on September 30 and March 31. ACT Company uses the calendar year as its reporting period. Date 4/1/2023 9/30/2023 3/31/2024 9/30/2024 3/31/2025 9/30/2025 3/31/2026 Nominal Interest Effective Interest Amortization 150,000.00 150,000.00 150,000.00 150,000.00 150,000.00 150,000.00 171,148.82 172,417.75 173,762.81 175,188.58 176,699.89 178,301.89 21,148.82 22,417.75 23,762.81 25,188.58 26,699.89 28,301.89 Carrrying Amount 2,852,480.27 2,873,629.09 2,896,046.83 2,919,809.64 2,944,998.22 2,971,698.11 3,000,000.00
Bond that does not coincide with the reporting period On April 1, 2023, ACT Company issued a 3-year, P3,000,000 face value bonds with a stated rate of 10% for P 2,852,480.27 The effective interest rate for similar bonds is 12%. Interest on the bonds is payable semi- annually on September 30 and March 31. ACT Company uses the calendar year as its reporting period. Date 4/1/2023 9/30/2023 3/31/2024 9/30/2024 3/31/2025 9/30/2025 3/31/2026 Nominal Interest Effective Interest Amortization 150,000.00 150,000.00 150,000.00 150,000.00 150,000.00 150,000.00 171,148.82 172,417.75 173,762.81 175,188.58 176,699.89 178,301.89 21,148.82 22,417.75 23,762.81 25,188.58 26,699.89 28,301.89 Carrrying Amount 2,852,480.27 2,873,629.09 2,896,046.83 2,919,809.64 2,944,998.22 2,971,698.11 3,000,000.00
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 9MC: On April 1 a company sells a 5-year, $60,000 bond with a 7% stated interest rate. The market...
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