On January 1, 2022, Kindness Corp. issued 3,000 of its 5-year, P1,000 face value, 12% bonds dated January 1 at an effective annual interest rate of 10%. Interest is payable each December 31. The company uses effective interest method of amortization. On December 31, 2023, the 1,500 bonds were extinguished early through acquisition in the open market by the company for P1,480,000 plus accrued interest. Based on the given information and the result of your audit, determine the following (Round off present value factors to four decimal places): Issue price of the bonds on January 1, 2022. Carrying amount of the bonds on December 31, 2022. Gain on early retirement of bonds on December 31, 2023.
On January 1, 2022, Kindness Corp. issued 3,000 of its 5-year, P1,000 face value, 12% bonds dated January 1 at an effective annual interest rate of 10%. Interest is payable each December 31. The company uses effective interest method of amortization. On December 31, 2023, the 1,500 bonds were extinguished early through acquisition in the open market by the company for P1,480,000 plus accrued interest. Based on the given information and the result of your audit, determine the following (Round off present value factors to four decimal places): Issue price of the bonds on January 1, 2022. Carrying amount of the bonds on December 31, 2022. Gain on early retirement of bonds on December 31, 2023.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2022, Kindness Corp. issued 3,000 of its 5-year, P1,000 face
Based on the given information and the result of your audit, determine the following (Round off present value factors to four decimal places):
- Issue price of the bonds on January 1, 2022.
- Carrying amount of the bonds on December 31, 2022.
- Gain on early retirement of bonds on December 31, 2023.
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