Problem 6-6 (A Dumaguete Company issued bonds with face amount of P6,000,000 on January 1, 2020. The nominal rate of 6% is payable annually on December 31. The bonds are issued with an 8% effective yield. The bonds mature on every December 31 each year at the rate of P2,000,000 for three years. Present value of 1 at 8% One period Two periods Three periods 0.9259 0.8573 0.7938 Required: 1. Determine the market price or issue price of the bonds. 2. Prepare journal entries for 2020. The effective interest method of amortization is used. 3. Determine the carrying amount of the bonds payable on December 31, 2020.

Problem 6-6 (A Dumaguete Company issued bonds with face amount of P6,000,000 on January 1, 2020. The nominal rate of 6% is payable annually on December 31. The bonds are issued with an 8% effective yield. The bonds mature on every December 31 each year at the rate of P2,000,000 for three years. Present value of 1 at 8% One period Two periods Three periods 0.9259 0.8573 0.7938 Required: 1. Determine the market price or issue price of the bonds. 2. Prepare journal entries for 2020. The effective interest method of amortization is used. 3. Determine the carrying amount of the bonds payable on December 31, 2020.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Subject- accounting
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9,7
! Required information Problem 9-7B Calculate the issue price of a bond and prepare amortization schedules (LO9-5, 9-7) [The following information applies to the questions displayed below.] Christmas Anytime issues $830,000 of 6% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Calculate the issue price of a bond and complete the first three rows of an amortization schedule when: Problem 9-7B Part 2 2. The market interest rate is 7% and the bonds issue at a discount. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Do not round interest rate factors. Round your answers to nearest whole dollar.) Issue price Date $ Cash Paid 830,000 Interest Change in Expense Carrying Value 01/01/2021 06/30/2021 $ 29,050 $ 29,050 12/31/2021 29,050 Carrying Value
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Subject: accounting
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