On January 2,2018, Ohio Company issued P 10 million of 12% bonds for P 12,734,120 due December 31,2024. Legal and other costs of P 50,000 were incurred in connection with the issue. Interest on the bonds is payable annually each December 31. Using a financial calculator, the effective interest rate on the these bonds was computed to be 8%, after considering the bond issued cost of P 50,000. The bonds are callable at 110, and on December 31,2021, after paying the periodic interest, Ohio called P 4,000,000 face amount of the bonds and retired them. REQUIRED: Determine the following: (a) Amortization of the premium for the year ended December 31,2018 (b) Carrying value of the bonds on December 31,2021 (c) Gain or loss on retirement of the bonds on December 31, 2021 (d) Interest expense for the year ended December 31, 2022 (e) Carrying value of the bonds on December 31,2022
On January 2,2018, Ohio Company issued P 10 million of 12% bonds for P 12,734,120 due December 31,2024. Legal
and other costs of P 50,000 were incurred in connection with the issue. Interest on the bonds is payable annually each
December 31.
Using a financial calculator, the effective interest rate on the these bonds was computed to be 8%, after considering
the bond issued cost of P 50,000.
The bonds are callable at 110, and on December 31,2021, after paying the periodic interest, Ohio called P 4,000,000
face amount of the bonds and retired them.
REQUIRED: Determine the following:
(a) Amortization of the premium for the year ended December 31,2018
(b) Carrying
(c) Gain or loss on retirement of the bonds on December 31, 2021
(d) Interest expense for the year ended December 31, 2022
(e) Carrying value of the bonds on December 31,2022
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