Problem 2: On January 1, 2021, PRANCER Company was authorized to issue 12% bonds with a face amount of ₱5,000,00
Problem 2: On January 1, 2021, PRANCER Company was authorized to issue 12% bonds with a face amount of ₱5,000,00
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 2: On January 1, 2021, PRANCER Company was authorized to issue 12% bonds with a face amount of ₱5,000,000. Interest on bonds is payable semi annually on January 1 and July. Bonds mature on January 1, 2026.The entire issue was sold on February 28, 2021 at 96 including interest. Bond issue cost amounts to ₱180,000. On October 1, 2023, bonds of ₱2,000,000 face amount were retired at 98 plus accrued interest.
Requirements:
- Prepare all necessary entries for calendar years 2021 and 2023
- Compute or provide the answers for the following:
- How much cash was received on February 28, 2021?
- How much discount or premium was initially recognized?(In the google form, if discount, put a negative sign before the numerical figure.)
- How much is the interest expense for the year ended December 31, 2021?
- How much is the carrying
value of the bond on December 31, 2021? - How much cash was paid on October 1, 2023?
- How much is the gain or loss on retirement of bonds to be recognized on October 1, 2023?
- How much is the remaining carrying value of the bonds on December 31, 2023?
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