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On April 1, 2020, CASHEW Company sold 12,000 of its ₱1,000 11%, 5-year face value bonds at 96. The bonds are dated April 1, 2020 and interest payment dates are April 1 and October 1, and the company uses the straight-line method of bond discount amortization. On March 31, 2021, CASHEW took advantage of favorable prices of its shares to extinguish all of the bonds by issuing 800,000 shares of its ₱P10 par value ordinary shares. At this time, accrued interest was paid in cash. The company’s shares was selling for ₱30 per share on March 1, 2021. How much is the increase in share premium due to the conversion of CASHEW’s bonds? ₱ 3,616,000 ₱ 0 ₱ 4,000,000 ₱ 3,520,000

On April 1, 2020, CASHEW Company sold 12,000 of its ₱1,000 11%, 5-year face value bonds at 96. The bonds are dated April 1, 2020 and interest payment dates are April 1 and October 1, and the company uses the straight-line method of bond discount amortization. On March 31, 2021, CASHEW took advantage of favorable prices of its shares to extinguish all of the bonds by issuing 800,000 shares of its ₱P10 par value ordinary shares. At this time, accrued interest was paid in cash. The company’s shares was selling for ₱30 per share on March 1, 2021. How much is the increase in share premium due to the conversion of CASHEW’s bonds? ₱ 3,616,000 ₱ 0 ₱ 4,000,000 ₱ 3,520,000

Principles of Accounting Volume 1
Principles of Accounting Volume 1
19th Edition
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax
Chapter13: Long-term Liabilities
Section: Chapter Questions
Problem 14MC: Whirlie Inc. issued $300,000 face value, 10% paid annually, 10-year bonds for $319,251 when the...
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On April 1, 2020, CASHEW Company sold 12,000 of its ₱1,000 11%, 5-year face value bonds at 96. The bonds are dated April 1, 2020 and interest payment dates are April 1 and October 1, and the company uses the straight-line method of bond discount amortization. On March 31, 2021, CASHEW took advantage of favorable prices of its shares to extinguish all of the bonds by issuing 800,000 shares of its ₱P10 par value ordinary shares. At this time, accrued interest was paid in cash. The company’s shares was selling for ₱30 per share on March 1, 2021. How much is the increase in share premium due to the conversion of CASHEW’s bonds?

₱ 3,616,000

₱ 0

₱ 4,000,000

₱ 3,520,000

 

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