On January 1, 2020, MIRANA COMPANY issued Php 15M bonds that is due on December 31, 2029. The bond indenture stated that the entity must establish a bond sinking fund in relation to the borrowing agreement. The entity set up a bank account for deposits on bond sinking fund. It was decided that deposits will be made every June 30 and December 31 starting June 30, 2019. The company expects to an average interest of 8% net of tax on this investment. a. How much MIRANA will deposit every payment period to accumulate the target the Php 15 M at December 31, 2029. b. Prepare journal entries for the current year in relation to the bond sinking fund.

On January 1, 2020, MIRANA COMPANY issued Php 15M bonds that is due on December 31, 2029. The bond indenture stated that the entity must establish a bond sinking fund in relation to the borrowing agreement. The entity set up a bank account for deposits on bond sinking fund. It was decided that deposits will be made every June 30 and December 31 starting June 30, 2019. The company expects to an average interest of 8% net of tax on this investment. a. How much MIRANA will deposit every payment period to accumulate the target the Php 15 M at December 31, 2029. b. Prepare journal entries for the current year in relation to the bond sinking fund.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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On January 1, 2026, ABC purchased serial bonds (to be held by collecting contractual cash flows representing principal and interest) with face amount of P10M and stated interest at 12%. The stated interest is payable annually on December 31. The bonds are acquired to have an effective yield at 13%. The bonds mature at annual installment of P2,500,000 every December 31 starting 2026. Determine the amount of the investment to be shown in the financial position statement on December 31, 2027 when the market value at the reporting period is P5,056,356. ( Round off your answer to the nearest peso. Use 4-decimal PVF.)
On January 1, 2021, RUDOLPH Company received ₱107,720 for a ₱100,000 face amount, 12% bond, a price that yields 10%. The bonds pay interest semi-annually. The entity elects the fair value option for valuing financial liabilities. On December 31, 2021, the fair value of the bond is determined to be ₱106,460. The entity recognized interest expense of ₱12,000 in the 2021 income statement. What was the gain or loss recognized in the income statement to report this bond at fair value? (IF gain, leave the numerical figure as is; if LOSS, put a negative (-) sign before the numerical figure)
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On the last day of its fiscal year ending December 31, 2020, the Lynbrook Inc. completed four financing arrangements. The funds provided by these initiatives will allow the company to expand its operations. a. Lynbrook issued 7% stated rate bonds with a face amount of $500,000. The bonds mature on December 31, 2030 (10 years). The market rate of interest for similar bond issues was 10%. Interest is paid quarterly beginning on March 31, 2021. b. The company leased three manufacturing facilities. Lease 1 requires 15 annual lease payments of $100,000 beginning on December 31, 2020. Lease 2 requires 10 semi-annual lease payments of $25,000 beginning on June 30, 2021. Lease 3 requires the first of 6 payments of $35,000 to be deferred for 4 years. Accounting standards require the three leases to be recorded as liabilities for the present value of the scheduled payments. Assume that an annual 8% interest rate properly reflects the time value of money for the lease obligations. Required:…

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