"Oh January 1, 2019, TYP Company purchased P1,200,000, 14% bonds of PSY Company for P1,352,143, a price that yields 10%. Interest on these bonds is payable every December 31. The bonds mature on December 31, 2022. On April 1, 2021, to pay a maturing obligation, JYP sold P720,000 face value bonds at 101 plus accrued interest. Market value of the bonds on different dates is as follows: December 31, 2019 108 December 31, 2020 106 December 31, 2021 104 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. What amount of interest income will be taken to profit or loss for the year ended December 31, 2021?

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Investment in Debt Securities Company purchased P1,200,000, 14% bonds of PSY Company for
P
P1,352,143, a price that yields 10%. Interest on these bonds is payable every December 31. The
bonds mature on December 31, 2022. On April 1, 2021, to pay a maturing obligation, JYP sold
P720,000 face value bonds at 101 plus accrued interest. Market value of the bonds on different
dates is as follows:
December 31, 2019
108
December 31, 2020
106
December 31, 2021
104
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.
What amount of interest income will be taken to profit or loss for the year ended December 31,
2021?
a) 36,800
b) 32,082
c) 70,581
d) Answer not given
e) 38,499
Transcribed Image Text:Investment in Debt Securities Company purchased P1,200,000, 14% bonds of PSY Company for P P1,352,143, a price that yields 10%. Interest on these bonds is payable every December 31. The bonds mature on December 31, 2022. On April 1, 2021, to pay a maturing obligation, JYP sold P720,000 face value bonds at 101 plus accrued interest. Market value of the bonds on different dates is as follows: December 31, 2019 108 December 31, 2020 106 December 31, 2021 104 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. What amount of interest income will be taken to profit or loss for the year ended December 31, 2021? a) 36,800 b) 32,082 c) 70,581 d) Answer not given e) 38,499
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