On December 31, 2020, Dome Company issued P 4,000,000, 8% serial bonds, to be repaid in the amount of P800,000 each year. Interest is payable annually on December 31. The bonds were issued to yield 10% a year. The bonds proceeds totaled P3,805,600 based on the present value on December 31, 2020 of five annual payments. Due date Prinicipal Interest Present value on 12/31/2020 12/31/2021 800,000 320,0000 1,018,000 12/31/2022 800,000 256,000 872,200 12/31/2023 800,000 192,000 745,000 12/31/2024 800,000 128,000 633,800 12/31/2025 800,000 64,000 536,600 3,805,600 Required: Determine the carrying amount of the bonds payable on December 31, 2021. The interest method of amortizing bond discount is used. Prepare journal entries for 2021.
On December 31, 2020, Dome Company issued P 4,000,000, 8% serial bonds, to be repaid in the amount of P800,000 each year. Interest is payable annually on December 31. The bonds were issued to yield 10% a year.
The bonds proceeds totaled P3,805,600 based on the present value on December 31, 2020 of five annual payments.
Due date Prinicipal Interest Present value on 12/31/2020
12/31/2021 800,000 320,0000 1,018,000
12/31/2022 800,000 256,000 872,200
12/31/2023 800,000 192,000 745,000
12/31/2024 800,000 128,000 633,800
12/31/2025 800,000 64,000 536,600
3,805,600
Required:
- Determine the carrying amount of the bonds payable on December 31, 2021. The interest method of amortizing bond discount is used.
- Prepare
journal entries for 2021.
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