On January 1, 20x1, Faith Co. issued 1,000, P2,000, 12% bonds for P2,206,168. Principal is due on December 31, 20x3, while interest is due annually every year-end. Faith Co. incurred transaction costs of P106,694 on the issuance. The effective interest rates are 8% before adjustment for transaction costs and 10% after adjustment for transaction costs. Requirement: Provide the journal entries over the life of the bonds.
On January 1, 20x1, Faith Co. issued 1,000, P2,000, 12% bonds for P2,206,168. Principal is due on December 31, 20x3, while interest is due annually every year-end. Faith Co. incurred transaction costs of P106,694 on the issuance. The effective interest rates are 8% before adjustment for transaction costs and 10% after adjustment for transaction costs. Requirement: Provide the journal entries over the life of the bonds.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 8RE
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On January 1, 20x1, Faith Co. issued 1,000, P2,000, 12% bonds for P2,206,168. Principal is due on December 31, 20x3, while interest is due annually every year-end. Faith Co. incurred transaction costs of P106,694 on the issuance. The effective interest rates are 8% before adjustment for transaction costs and 10% after adjustment for transaction costs.
Requirement: Provide the
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