PROBLEM 1: Penamante Corporation had the following issuances of bonds for the year 2019 in response to its various financing needs: A. On January 1, 2029, Penamante Corporation issued 2,000 of its 5 year, P1,000 face value, 11% bonds dated January 1 at an effective annual interest rate of 9%. Interest is payable each December 31. Penamante uses the effective interest method of amortization. On December 31, 2030, the 2,000 bonds were extinguished early through acquisition in the open market by Penamante for P1,980,000 plus accrued interest. B. On July 1, 2029, Penamante issued 5,000 of its 6 year, P1,000 face value, 10% convertible bonds at par. Interest is payable every June 30 and December 31. On the date of issue, the prevailing market rate for similar debt without the conversion option is 12%. On July 1, 2030, an investor in Penamante’s convertible bonds tendered 1,500 bonds for conversion into 15,000, P1 par value, ordinary shares of Penamante. Based on the preceding information, answer the following questions: 1. The conversion of the 1,500, 6 year, P1,000 face value bonds on July 1, 2030 will increase net share premium by: 2. The gain on early retirement of bonds on December 31, 2030 is: 3. The issue price of the 2,000, 5 year, P1,000 face value bonds on January 1, 2029 is:
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
PROBLEM 1: Penamante Corporation had the following issuances of bonds for the year 2019 in response to its various financing needs:
A. On January 1, 2029, Penamante Corporation issued 2,000 of its 5 year, P1,000 face value, 11% bonds dated January 1 at an effective annual interest rate of 9%. Interest is payable each December 31. Penamante uses the effective interest method of amortization. On December 31, 2030, the 2,000 bonds were extinguished early through acquisition in the open market by Penamante for P1,980,000 plus accrued interest.
B. On July 1, 2029, Penamante issued 5,000 of its 6 year, P1,000 face value, 10% convertible bonds at par. Interest is payable every June 30 and December 31. On the date of issue, the prevailing market rate for similar debt without the conversion option is 12%. On July 1, 2030, an investor in Penamante’s convertible bonds tendered 1,500 bonds for conversion into 15,000, P1 par value, ordinary shares of Penamante.
Based on the preceding information, answer the following questions:
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