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Assignment-no.-VI

The document presents various problems related to bonds payable, including calculations for term and serial bonds, net cash received from bond issuances, bond liabilities, and accrued interest. It includes multiple-choice questions for each problem, requiring the reader to determine specific financial amounts based on given scenarios. The problems cover different aspects of bond accounting, such as issuance costs, fair value options, and interest expenses.

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19 views

Assignment-no.-VI

The document presents various problems related to bonds payable, including calculations for term and serial bonds, net cash received from bond issuances, bond liabilities, and accrued interest. It includes multiple-choice questions for each problem, requiring the reader to determine specific financial amounts based on given scenarios. The problems cover different aspects of bond accounting, such as issuance costs, fair value options, and interest expenses.

Uploaded by

janeysug
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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ASSIGNMENT NO.

6
BONDS PAYABLE Fair value option

Problem 1
Blue Company reported the following long-term debt on December 31,2024:
12% registered debentures, callable in 2025, due in 2026
3,500,000
11% collateral trust bonds, convertible into ordinary shares beginning in 2025, due in 2026
3,500,000
10% subordinated debentures, P500,000 maturing annually beginning in 2025
1,500,000

1. What total amount should be reported as term bonds?


a. 3,000,000
b. 3,500,000
c. 5,000,000
d. 6,500,000

2. What total amount should be reported as serial bonds?


a. 4,500,000
b. 1,500,000
c. 5,000,000
d. 3,000,000

Problem 2
Hancock Company reported the following noncurrent liabilities on December 31.2023:
9% registered bonds, P250.000 maturing annually beginning in 2024
2,750,000
11% convertible bonds, callable in 2024, due 2025
1,250,000
12% guaranty security bonds, due 2025
2,500,000
10% commodity backed bonds, P500,000 maturing annually beginning in 2024
2,000,000

1. What total amount of serial bonds should be reported?


a. 4,750,000
b. 3,750,000
c. 4,500.000
d. 2,000,000

2. What total amount should be reported as term bonds?


a. 4,000,000
b. 1,250.000
c. 2,500,000
d. 3,750,000
Problem 3
Zola Company had the following long-term debt:
Bonds maturing in installments, secured by machinery 1,000,000
Bonds maturing on a single date, secured by realty 1,800,000
Collateral trust bonds 2,000,000

What total amount should be reported as debenture bonds?


a. 2,000,000
b. 1,000,000
c. 1,800,000
d. 0

Problem 4
On October 1, 2023, Shane Company issued at 110 plus accrued interest of 12%, 5,000 bonds, P1,000
face amount. The bonds are dated January 1, 2023 and mature on January 1, 2028. Interest is payable
semiannually on January 1 and July 1. The entity paid bond issue cost of P200,000.

What is the net cash received from the bond issuance?


a. 5,650,000
b. 5,550,000
c. 5,250,000
d. 5,450,000

Problem 5
On April 1, 2023, Greg Company issued at 99 plus accrued interest, 4,000 of 8% P1,000 face amount
bonds. The bonds are dated January 1, 2023, mature on January 1, 2033, and pay interest on January 1
and July 1. The entity paid bond issue cost of P140,000.

From the bond issuance, what is the net cash received?


a. 4.040,000
b. 3.960.000
c. 3,900,000
d. 3,820.000

Problem 6
On June 30, 2024, Huff Company issued at 99, five thousand bonds of 8%, P1,000 face amount. The
bonds were issued through an underwriter to whom the entity paid bond issue cost of P425,000.

On June 30, 2024, what amount should be reported as bond liability?


a. 4,525,000
b. 4,950,000
c. 5,000,000
d. 4,575,000
Problem 7
On July 1, 2024, Carr Company issued at 104, five thousand bonds of 10% P1,000 face amount. The
bonds were issued through an underwriter to whom the entity paid bond issue cost of P125,000.

On July 1, 2024, what amount should be reported as bond liability?


a. 4,875,000
b. 5,075,000
c. 5,200,000
d. 5,325,000

Problem 8
During the current year, C'ain Company incurred the following costs in connection with the issuance of
bonds:
Promotion cost 200,000
Printing and engraving 150,000
Legal fees 800,000
Fees paid to independent accountants for registration 100,000
Commissions paid to underwriter 900,000

What amount should be recorded as bond issue costs to be amortized over the term of the bonds?
a. 1,950,000
b. 2,150,000
c. 1,800,000
d. 2,000,000

Problem 9
Aye Company is authorized to issue P5,000,000 of 6%, 10-year bonds dated July 1, 2024 with interest
payments on June 30 and December 31. When the bonds are issued on November 1, 2024, the entity
received cash of P5,150,000 including accrued interest.

What amount should be recorded as discount or premium on bonds payable?


a. 150,000 bond premium
b. 50,000 bond premium
c. 150,000 bond discount
d. No bond premium and discount
Problem 10
On January 31, 2024, Beau Company issued P3,000,000 maturity value, 12% bonds for P3,000,000 cash.
The bonds are dated December 31, 2023 and mature on December 31, 2033. Interest is payable
semiannually on June 30 and December 31.

What amount of accrued interest payable should be reported on September 30, 2024?
a. 270,000
b. 240,000
c. 180,000
d. 90,000

Problem 11
On November 1, 2024, Mason Company issued P8,000,000 of 10-year, 8% term bonds dated October 1,
2023. The bonds were sold to yield 10% with total proceeds of P7,000,000 plus accrued interest. Interest
is paid every April 1 and October 1.

What amount should be reported as accrued interest payable on December 31, 2024?
a. 175,000
b. 160,000
c. 116,667
d. 106,667

Problem 12
On January 1, 2024, Ezekiel Company received the fair value of P1,077,200 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 has elected the fair value option for measuring the financial liability. On
December 31, 2024, the fair value of the bonds is determined to be P1,064,600 due to market and
interest factors.

1. What is the carrying amount of the bonds payable on January 1, 2024?


a. 1.000.000
b. 1,077,200
c. 500,000
d. 538.600

2. What amount should be reported as interest expense for 2024?


a. 120,000
b. 100,000
c. 107,720
d. 129,264

3. What amount should be reported as gain or loss from change in fair value of the bonds for 2024?
a. 64,600 gain
b. 64.600 loss
c. 12,600 gain
d. 12.600 loss
4. What is the carrying amount of the bonds payable on December 31,2024?
a. 1,064,600
b. 1,077,200
c. 1.000,000
d. 1,064,920

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