On January 1, 2021, Demeanor Company purchased bonds with face amount of P5,000,000 to be held as financial assets at amortized cost. The entity paid P4,600,000 plus transaction cost of P142,000. The bonds mature on December 31, 2023 and pay 6% interest annually on December 31 of each year with 8% effective yield. The bonds are quoted at 105 on December 31, 2021. The bonds are sold at 110 on December 31, 2022 Required: 1. Prepare a table of amortization of the discount. 2. Prepare journal entries for 2021 and 2022.
On January 1, 2021, Demeanor Company purchased bonds with face amount of P5,000,000 to be held as financial assets at amortized cost. The entity paid P4,600,000 plus transaction cost of P142,000. The bonds mature on December 31, 2023 and pay 6% interest annually on December 31 of each year with 8% effective yield. The bonds are quoted at 105 on December 31, 2021. The bonds are sold at 110 on December 31, 2022 Required: 1. Prepare a table of amortization of the discount. 2. Prepare journal entries for 2021 and 2022.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Problem 20-2 (IFRS)
On January 1, 2021, Demeanor Company purchased bonds
with face amount of P5,000,000 to be held as financial assets
ot amortized cost. The entity paid P4,600,000 plus transaction
cost of P142,000.
The bonds mature on December 31, 2023 and pay 6% interest
annually on December 31 of each year with 8% effective yield.
The bonds are quoted at 105 on December 31, 2021.
The bonds are sold at 110 on December 31, 2022
Required:
1. Prepare a table of amortization of the discount.
2. Prepare journal entries for 2021 and 2022.
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