On January 1, 2021, Marceline the Vampire Queen Co. purchased P1,000,000 10% bonds classified at amortized cost. The bonds were purchased to yield 12%. Interest is payable annually every December 31. The bonds mature on December 31, 2025. On December 31, 2021, the bonds were selling at 99. OnJanuary 2, 2023, Marceline the Vampire Queen Co. sold P500,000 face value bonds at 101. The bonds were selling at 103 on December 31, 2023. Based on
On January 1, 2021, Marceline the Vampire Queen Co. purchased P1,000,000 10% bonds classified at amortized cost. The bonds were purchased to yield 12%. Interest is payable annually every December 31. The bonds mature on December 31, 2025. On December 31, 2021, the bonds were selling at 99. OnJanuary 2, 2023, Marceline the Vampire Queen Co. sold P500,000 face value bonds at 101. The bonds were selling at 103 on December 31, 2023. Based on
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2021, Marceline the Vampire Queen Co. purchased P1,000,000 10% bonds classified at amortized cost. The bonds were purchased to yield 12%. Interest is payable annually every December 31. The bonds mature on December 31, 2025. On December 31, 2021, the bonds were selling at 99. OnJanuary 2, 2023, Marceline the Vampire Queen Co. sold P500,000 face value bonds at 101. The bonds
were selling at 103 on December 31, 2023. Based on the above and the result of your audit, answer the following:
Present value of 1 for 3 periods at 12%: 0.635518078
Present value of an annuity of 1 for 10 periods at 12%: 3.037349347
1. The purchase price of the bonds on January 1, 2021 is closest to
a. 927,800
b. 1,075,796
c. 946,480
d. 939,253
2. The carrying amount of the investment in bonds on December 31, 2021 is closest to
a. 1,063,376
b. 960,058
c. 951,963
d. 939,226
3. How much is the gain/loss on sale on January 2, 2023?
a. 21,981 gain
b. 21,981 loss
c. 41,963 gain
d. 41,963 loss
4. How much is the interest income on December 31, 2023?
a. 57,971.94
b. 58,928.57
c. 115,943.88
d. 117,857.14
5. How much is the discount amortization on December 31, 2022?
a. 12,710.36
b. 14,235.60
c. 15,943.88
d. 17,857.14
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