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On April 1, 2020, Cat 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, Cat 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 were selling for ₱30 per share on March 1, 2021. How much is the increase in share premium due to the conversion of Cat's bonds? a. ₱ 4,000,000 b.₱ 0 c. ₱ 3,520,000 d. ₱ 3,616,000

On April 1, 2020, Cat 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, Cat 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 were selling for ₱30 per share on March 1, 2021. How much is the increase in share premium due to the conversion of Cat's bonds? a. ₱ 4,000,000 b.₱ 0 c. ₱ 3,520,000 d. ₱ 3,616,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On April 1, 2020, Cat 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, Cat 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 were selling for ₱30 per share on March 1, 2021. How much is the increase in share premium due to the conversion of Cat's bonds?

a. ₱ 4,000,000
b.₱ 0
c. ₱ 3,520,000
d. ₱ 3,616,000

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