Scribd
Upload
47 views

A. 65,000 Loss B. 5,000 Loss D. 65,000 Gain

Mishane Company issued and held various bonds between January 1, 2019 and December 31, 2020. The document contains 15 multiple choice questions that assess the accounting for the bonds in accordance with Philippine Financial Reporting Standards, including recording the issuance of bonds, amortization of bond discounts and premiums, measurement of bonds at fair value, and gain/loss on sale of bonds.

Uploaded by

Lyn Abuda
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
47 views

A. 65,000 Loss B. 5,000 Loss D. 65,000 Gain

Mishane Company issued and held various bonds between January 1, 2019 and December 31, 2020. The document contains 15 multiple choice questions that assess the accounting for the bonds in accordance with Philippine Financial Reporting Standards, including recording the issuance of bonds, amortization of bond discounts and premiums, measurement of bonds at fair value, and gain/loss on sale of bonds.

Uploaded by

Lyn Abuda
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 3

ACCTG 103

BOND

1. On January 1, 2020, Mishane Company received P1,070,000 for 12% bonds with face amount of P1,000,000.
The bonds were sold to yield 10%. Interest is payable semiannually every January 1 and July 1. The entity
elected the fair value option for measuring financial liabilities. On December 31, 2020, the fair value of the bonds
is P1,065,000. The change in fair value of the bonds is attributable to market factors.
a. 65,000 loss
b. 5,000 loss
c. 5,000 gain
d. 65,000 gain

2. On January 31, 2020, Mishane Company issued P3,000,000 maturity value, 12% bonds for P3,000,000 cash. The
bonds are dated December 31, 2019, and mature on December 31, 2029. Interest will be paid semiannually on
June 1 and December 1. What amount of accrued interest payable should be reported on September 30, 2020?
a. 90,000
b. 120,000
c. 180,000
d. 360,000

3. On January 1, 2019, Mishane Company purchased 12% bonds with face amount of P5,000,000 for P5,500,000
including transaction cost of P100,000. The bonds provide an effective yield of 10%. The bonds are dated
January 1, 2019 and pay interest annually on December 31 of each year.
The bonds are quoted at 110 on December 31, 2019. The entity has irrevocably elected to use the fair value
option. What amount of gain from change in fair value should be reported for 2019?
a. 100,000
b. 0
c. 350,000
d. 200,000

4. On January 1, 2019, Mishane Company acquired P4,000,000 of 10% face amount bonds for P3,767,000 to be
held as financial assets at amortized cost with a 14% effective yield. Interest on bonds is payable annually on
December 31 and the bonds mature on January 1, 2023. The effective interest method of amortization is used.
What is the carrying amount of the bond investment on December 31, 2019?
a. 3,814,380
b. 4,000,000
c. 3,767,000
d. 3,894,380

5. On October 1, 2020, Mishane Company issued 5,000 12% bonds with face amount of P1,000 per bond at 110.
The bonds which mature on January 1, 2025, pay interest semiannually on January 1 and July 1. The entity paid
bond issue cost of P140,000. How much cash was received from the issuance of the bonds?
a. 5,510,000
b. 5,450,000
c. 5,500,000
d. 5,650,000

6. On July 1, 2019, Mishane Company purchased P5,000,000 face amount, 9% bonds for P4,615,000 to yield 10%
per year to be held as financial assets at amortized cost: The bonds pay interest semiannually on January 1 and
July 1. On Dec 31, 2019, what amount should be reported as interest receivable?
a. 225,000
b. 250,000
c. 230,750
d. 200,000

7. On January 1, 2020, Mishane Company issued 6% bonds with face amount of P4,000,000 for net proceeds of
P3,677,600, a price that yields 8%. Interest is payable annually every December 31.
The entity elected the fair value option. On December 31, 2020, the bonds are quoted at 96. What amount should
be reported as gain or loss from change in fair value for 2020?
a. 162,400 gain
b. 162,400 loss
c. 122,400 gain
d. 122,400 loss

8.
Mishane Company had the following long-term debt:
Sinking fund bonds, maturing in installments 2,200,000
Industrial revenue bonds, maturing in installments 900,000
Subordinated bonds, maturing on a single date 2,000,000
What is the total amount of serial bonds?
a. 2,900,000
b. 5,100,000
c. 3,100,000
d. 2,000,000

9. On July 1, 2019, Mishane Company paid P1,198,000 for 10% bonds with a face amount of P1,000,000 to be held
as financial assets at amortized cost. Interest is paid on June 30 and December 31. The bonds were purchased to
yield 9%. The entity used the effective interest method. What is the carrying amount of the bond investment on
December 31, 2019?
a. 1,195,920
b. 1,198,000
c. 1,201,910
d. 1,194,090

10. On July 1, 2020, Mishane Company issued at 104, five thousand 10% bonds with face amount of P1,000 per
bond. The bonds were issued through an underwriter to whom the entity paid bond issue cost of P100,000. On
July 1, 2020, what is the carrying amount of the bonds payable?
a. 5,200,000
b. 5,000,000
c. 5,300,000
d. 5,100,000

11. Mishane Company purchased 8,000, P1,000 face amount, 9% bonds to yield 10%. The carrying amount of the
bonds on January 1, 2019 was 7,800,000. The bonds mature on June 30, 2022 and pay interest semi-annually on
June 30 and December 31.
The entity sold 4,000 bonds on March 1, 2019 for P3,920,000 after the interest has been received. What amount
should be recognized as loss on sale of bonds?
a. 0
b. 25,000
c. 15,000
d. 20,000

12. Mishane Company purchased bonds at a discount of P100,000. Subsequently, the entity sold these bonds at
a premium of P150,000. During the period that the entity held this investment, amortization of the discount
amounted to P40,000. What amount should be reported as gain on sale of bonds?
a. 210,000
b. 200,000
c. 290,000
d. 250,000

13. Mishane Company is authorized to issue P5,000,000 of 6%, 10-year bonds dated July, 1, 2020 with interest
payments on June 30 and December 31. When the bonds are issued on November 1, 2020, the entity received
cash of P5,180,000 including accrued interest. What is the discount or premium from the issuance of the bonds?
a. 80,000 discount
b. 80,000 premium
c. 50,000 premium
d. 50,000 discount

14. Mishane Company reported the following financial liabilities on December 31, 2020:
9% debentures, callable in 2021, due in 2022 3,500,000
11% collateral trust bonds, convertible into share capital beginning in 2021, due in 2022 1,000,000
10% debentures, P300,000 maturing annually 1,500,000
What is the total amount of term bonds?
a. 6,000,000
b. 3,500,000
c. 5,000,000
d. 4,500,000

15. On January 1, 2020, Mishane Company reported bonds payable of P8,000,000 and related unamortized
discount of P430,000.
On January 1, 2020, the entity retired P5,000,000 of the outstanding bonds at face amount plus a call premium of
P150,000
What amount should be reported in the 2020 income of debt?
a. 0
b. 318,750
c. 150,000
d. 418,750

You might also like