Anthony and Anjo-Audit of Stockholders' Equity

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AUDIT OF STOCKHOLDERS EQUITY –EXCERCISES EXERCISE 1 Your

audit

traded

client,

in

the

3,000,000 1,000,000

HAMPTON stock

authorized shares

BAYS

market. shares

were

issued

Inc.,

At

of and

is

a

public

December

P10

par

outstanding.

31, value The

enterprise 2013, ordinary

whose

Hampton shares,

stockholders’

equity

share Bays of

is had

which accounts

at December 31, 2013 had the following balances. Ordinary Share Capital

P10,000,000

Share premium

3,750,000

Retained Earnings

3,250,000

Transactions during 2014 and other information relating to the s tockholders’ equity accounts were as follows: 1. On January 5, 2014, Hampton Bays issued at P54 per share, 50,000 shares of P50 par value, 9% cumulative convertible preference share, each preference share is convertible at the option of the holder, into two ordinary shares. 2. On February 1, 2014, Hampton Bays reacquired 10,000 shares for P16 per share. 3. On April 30, 2014, Hampton Bays sold 250,000 ordinary shares (previously unissued) of at P17 per share. 4. On June 18, 2014, Hampton Bays declared a cash dividend of P1 per ordinary shares, payable on July 12, 2014 to stockholders of recor d on July 1, 2014. 5. On November 10, 2014, Hampton Bays sold 5,000 treasury shares for P21 per share. 6. On December 14, 2014, Hampton Bays Declared the yearly cash dividend on preferences share, payable on January 14, 2015 to shareholders of record on December 31, 2014. 7. On January 20, 2015, before the books were closed for 2014. Hampton Bays became aware that the ending inventories at December 3, 2013 were understated by P150, 000 (after tax effect on 2013 net income was P90,000). The appropriate correction entry was recorded the same day. 8. After correcting the beginning inventory, net income for 2014 was P2,250,000 REQUIRED: 1. Ordinary Share Capital a.

10,000,000

b. 12,500,000

c. 12,450,000

d. 14,250,000

b. 5,700,000

c. 5,500.000

d. 5,525,000

b. 4,045,000

c. 4,035,000

d. 3,955,000

b. 55,000

c. 50,000

d. 80,000

b. 24,690,000

c. 24,770,000

d. 24,840,000

2. Share premium a.

5,725,000

3. Retained earnings a.

4,125,000

4. Treasury shares a.

160,000

5. Total stockholders’ equity a.

22,190,000

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EXERCISE 2 The Stockholders’ equity of the JACKSON HEIGHTS CO., Dec. 31, 2013, appears as follows:

Preference share capital, 6 percent, p100 par of 5,000

P500,000

Shares Equity of ordinary shareholders, 50,000 shares, no par

3,500,000

Total

P 4,000,000

At Dec. 31, 2014, the stockholders’ equity appears as follows:

Preferences Share, 6 percent, P100 par of 4,500 shares

P 450,000

Equity of ordinary shareholders, 60,000 shares, no par

4,550,000

Total Capital

P 5,000,000

Certain 2014 transactions follow: (1) The par value of each ordinary share is P 40. The first 50, 000 shares were issued at P50. (2) The additional 10, ordinary shares were sold at P60 per share. (3) Net income for 2014 was P665 000. (4) 500 preferences shares were purchased for the treasury at P110 each. (5) Cash dividends paid: preference, P30, 000; or dinary, P180,000. REQUIRED: 1. What is the adjusted retained earnings balance at the end of 2014? 2. What is the total stockholders’ equity at the end of 2014? EXCERCISES 3 On January 2, 2013, the FORT JONES, Inc. issued P2,000,000 of 8% convertible bonds at 104. The bonds pay interest is payable annually every January 1. The bond contract entitles the bondholders to receive 6 shares of P100 par value ordinary share in exchange for each P1,000 bond. On the date of issue, the prevailing market interest rate for similar debt without the conversion option is 10%. On December 31, 2014, at the holders of the bonds with total face value of P1,000,000 exercised their conversion privilege. In addition, the company reacquired at 110, bonds with a face value of P500,000 The balances in the capital accounts as of December 31, 2013 were: Share capital, P100 par, authorized 50,000 shares, Issued and outstanding, 30,000 shares

P3,000,000

Share premium

500,000

Market value of the ordinary share and bonds we re as follows: Date

Bonds

Ordinary share

January 1, 2014

118

40

December 31, 2014

110

42

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Required: 1. How much of the proceeds from the issuance of convertible bonds should be allocated to equity? 2. How much is the carrying value of the payable as of December 31, 2013? 3. How much is the interest expense for the year 2014? 4. How much is the loss on bond reacquisition on December 31, 2014? EXERCISE 4 On January 1, 2013, the Stockholder’s Equity section of Gemini Company’ s balance sheet revealed the

following information: P5 Convertible Preferences shares (P40 par value; 50,000 Shares authorized, 20,000 shares issued and outstanding)

P 800,000

Ordinary shares (P5 par value; 2000,000 shares authorized; 120,000 shares issued and outstanding)

600,000

Share premium

3,000,000

Retained earnings

4,500,000

Total Stockholder’s Equity 

P8,900,000

In addition, the following information is known: a. On February 2, 2013, 15,000 ordinary shares were acquired by the company for P33 per share. b. On September 30, 2013, 5,000 preferred were converted into ordinary shares. One preference share is convertible into one ordinary share. At the time of conversion, the ordinary share had a market value of P42 per share. c.

On December 21, 2013, the company received a stock subscription for 10,000 ordinary shares at a subscription price of P33 per share. The subscription contract required a cash down payment equal to 60% of the subscription price, with that balance due on February 1, 2014.

d. On February 1, 2014, 8,500 ordinary shares were issued according to subscription contract. Because of default by a subscriber, 1500 shares were not issued and the down-payment was forfeited. e. On April 15, 2014, 10,000 shares held in treasury were reissued at P50 per share. f.

On May 16, 2014, a special dividend in the form of preference share was distributed to ordinary stockholders. One hundred ordinary shares entitled a shareholder to one preference share.

g.

Cash dividends are declared for preferred and ordinary shares on October 31, and April 30 of each year. Semi-annual cash dividends for ordinary share are P.50 per share.

h. Net income for 2013 was P660,000 and for 2014, P890,000.

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REQUIRED: 1. The balance of the Treasury Shares account on December 31, 2014 was: a. 495,000

b. -0-

c. 165,000

d. 300,000

2. What is the balance of the Preference share capital account at December 31, 2014? a. 651,400

b. 600,000

c. 800,000

d. 851,400

3. What is the balance of the Ordinary share capital account at December 31, 201 4? a. 675,000

b. 600,000

c. 625,000

d. 667,500

4. What is the balance of the share premium account at December 31, 2014? a. 3,612,700

b. 3,654,700

c. 3,625,000

d. 3,437,700

5. How much is the total cash dividends declared in 2013? a. 287,500

b. 92,500

c. 195,000

d. 107,500

6. How much is the total cash dividends declared in 2014? a. 78,212.50

b. 206,712.50

c. 207,612.50

d. 193,212.50

7. What is the total retained earnings at December 31, 2014? a. 5,648,287.50

b. 5,596,887.50

c. 4,965,000

d. 5,794,300.50

EXERCISE 5 Amityville Company began operation on January 1. Authorized were 20,000 shares of P10 par value ordinary stock and 40,000 shares of 10%’ P100 par value convertible preferred stock. The following transactions involving stockholders’ equity occurr ed during the first year of o perations.

January 1

Issued 500 ordinary shares to the corporation promoters in exchanges for land valued at P170,000 and services valued at P70,000. The property had cost the promoters P90,000 3 years before and was carried on the promoters’ book at P50,000.

Feb. 23

Issued 10,000 convertible preference shares with a par value of P100 per share. Each share can be converted to 5 ordinary shares. The stock was issued at a price of P150 per share, and the company paid P75,000 to an agent for selling the shares.

March 10

Sold 3,000 ordinary shares for P390 per share. Issue costs were P25,000.

April 10

4,000 ordinary shares were sold under stock subscriptions at P450 per share. No cash was received.

July 14

Exchange 700 ordinary shares and 1,400 preference shares for a machine with a fair value of P510,000. The machine was originally purchased for P380,000 by the investors and has a book value of P220,000. In addition, 600 ordinary shares were sold for P240,000 in cash.

Aug. 3

Received payments in full for half of the stock subscription and payments on account on the rest of the subscriptions. Total cash rece ived was P1,400,000.

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Dece.1

Declared a cash dividend of P10 Per share on preference shares, payable on December 31 to stockholders of record on December 15, and a P20 per share cash dividend on ordinary shares, payable on January 5 of the following year to stockholders of record on December 15.

Dec. 31

Paid preferences share dividend Net income for the first year of operations was P600,000

Determine the balance of the following accounts 1. Preference share capital a. 1,000,000

b. 1,200,000

c. 1,140,000

d. 1,240,000

b. 590,000

c. 425,000

d. 525,000

b. 55,000

c. 68,000

d. 86,000

b. 2,875,000

c. 3,176,000

d. 1,760,000

b. 716,000

c. 310,000

d. 324,000

2. Preference share premium a. 515,000 3. Ordinary share capital a. 63,000

4. Premium on ordinary shares a. 3,617,000 5. Retained earnings a. 600,000 EXERCISE 6 The Company adopted the following stock compensation plan for its employees. For each case, compute the amount of expense t hat should be recognized each year. CASE 1 On January 1, 2013, the company granted an employee an option to purchase 30,000 shares of its own P5 par value ordinary stock at P20 per share. The option became exercisable on December 31, 2014, after the employee completed two years of service. The option was exercised on January 15, 2015. The market prices of stock were as follows: January 1, 2013

30

December 31, 2013

50

December 31, 2014

55

CASE 2 In connection with a stock option plan for the benefit of key employees, the company intends to distribute treasury shares when the options are exercised. These shares were bought in 2011 at P42 per shares. On January 1, 2012 the Company granted stock options for 100,000 shares at P38 per share as additional compensation for services to be rendered over the next three years. The options are exercisable during a 2-year period beginning January 1, 2015, by grantee still employed by the Company.

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Market price of the Company’s stock was P47 per share at the grant date. The fair value of the stock

option is P12 on grant date. No stock options were terminated during 2012 CASE 3 On January 1, 2013, the Company granted stock option to certain key employees as additional compensation, the options wee for 100,000 shares of P2 par value ordinary stock at an option price of P15 per shares, Market price of this stock on January 1, 2013, was P20 per share. The fair value of each stock option on January 1, 2013 is P8. The options were exercisable beginning January 1, 2013 and expire December 31, 2014. On April 1, 2013, the Company’s stock was trading at P21 per share, all the options were exercised. CASE 4 The Company granted a stock appreciation right to the general manager on January 1, 2013. After a four-year service period, the employee is entitled to receive cash equal to the appreciation in share price over the market value on January 1, 2013. Thus, the market value on January 1, 2013 is the predetermined price for purposes of determining the compensation, the stock appreciating right had the following terms: a. Service period – January 1, 2013 to December 31, 2016 b. Number of shares – 20,000 shares c.

Exercise date – January 1, 2017

The quoted prices of the company’s stock are:

January 1, 2013

200

December 31, 2015

240

December 31, 2013

210

December 31, 2016

250

December 31, 2014

220

CASE 5 Vesting condition 

Three years of continued employment

Assumptions: -

100 share options granted to eac h of the 1,000 employees on January 1, 2009 (total option – 100,000)



-

FV of each share option in P30.00

-

Exercise price is P120.00, par value of each share of stock is P100.00

Estimated share options that will vest -

Best estimate as of January 1, 2009 – 20% of the employees will leave during the next three years

-

Actual and revised estimate of employees who leave the company 

2009 – 40 employees left, revised estimate is 25 % of remaining



2010 – 44 employees left; revised estimate is 10 % of remaining



2011 – 30 employees left of remaining.

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

800 employees exercised their option while the remaining employees allowed their option to lapse

CASE 6 Vesting condition

-

-

Employees must remain in the entity’s employ during the vesting period

-

Share will vest as follows: 

End of 2013, if earnings increase by 18%



End of 2014, if earnings over two years increase by average of 13%



End of 2015, if earnings over three years increase by average of 10%

Assumptions: -

100 share options granted to each of the 1,000 employees on January 1, 2013 (total shares – 100,000)





FV of each share option is P30.000

Actual and revised estimate of entity’s average earnings

-

End of 2013: actual- 14%; est. earning in 2014-14%

-

End of 2014: actual- 10%; est. earnings in 2015- 6%

-

End of 2015: actual- 8%

Actual and estimate of employees who leave t he company -

2013 -60 employees left, add’l employees to leave –  60

-

2014 – 56 employees left; add’l employees to leave –  50

-

2015 – 46 employees left

CASE 7 Vesting condition -Continued employment for three years -Share options can be exercised if the share price increases from P100 on Jan. 1, 2013 to P130 on Dec. 31, 2015. The options can be exercised any time during the next seven years 

Assumptions: -10,000 share options granted to senior executives on Jan. 1, 2013 -All senior executives are still in service as of Dec. 31, 2015 -The entity uses a pricing model that takes into account the possibility that the share price will exceed P130 on De. 31, 2015 -FV of option using this market condition is P48 per option.

EXERCISE 7 Whitestone Co. had the following selected information in its December 31, 2013 Stockholders’ Equity

portion of its balance sheet:

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10% Preference share, P100 par value, 50,000 shares authorized, 10,000 shares issued and outstanding

P 1,000,000

Ordinary shares, P50 par value, 100,000 shares authorized, 50,000 shares issued, 5,000 shares reacquired at P75 per share

2,5000,000

Share premium on preference shares

250,000

Share premium on ordinary shares

250,000

Ordinary share warrants outstanding

450,000

Accumulated profits

2,350,000

Audit notes: a. The Ordinary share warrants outstanding account resulted from the company’s issuance of 5,000, P1,000 12% bonds with detachable warrants on June 30, 2013. The bonds which pay annual interest every December 31 were issued at total lump sum of P 5,700,000. The bonds were quoted at 105 without the warrants while each warrant attached to each P1,000 bond were selling at P25. Five warrants surrendered together with P60 exercise price entitle the holder to acquire one ordinary share. Warrants can be exercised 2 years from date of the issuance. b. On March 1, 2014, 4,000 treasury shares were issued at P70 per share and retired the remaining treasury shares. c.

On April 15, 2014 stock rights were issued to ordinary shareholders. Ten stock rights plus P50 per share entitle the holder to acquire one additional ordinary share.

d. On Jun 1, 60% of the warrants issued in 2013 were exercised. e. On August 15, all but 9,000 stock rights were exercised by the ordinary shareholders. f.

Net income for the year amounted to P1,250,000.

Required: 1. What is the correct balance of the Ordinary share capital account as of December 31, 2014? a. P 2,800,000

b. P 2,750,000

c. P 2,700,000

d. P 2,680,000

2. What is the share premium resulting from the share issuance from the exercise of warrants? a. P 160,000

b. P 96,000

c. P 460,000

d. P 276,000

3. What is the total stockholders’ equity as of December 31, 2014? a. P 6,800,000

b. P 6,566,000

c. P 7,600,000

d. P 8,191,000

EXERCISE 8 Evanescence Company has the following shareholders’ equity section as of December 31, 2014:

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Shareholders’ Equity 

Preference shares, P100 par 8, percent cumulative, voting, 100,000 shares issued and outstanding

P 10,000,000

Ordinary shares, P20 par, 1,000,000 shares authorized, 700,000 shares issued and outstanding

14,000,000

Additional paid-in capital

8,000,000

Total paid-in capital

32,000,000

Retained earnings

30,000,000 P 62,000,000

Total shareholders’ equity

There are no dividends in arrears on the preference shares. During 2015, the following events f transactions occurred: a. Earning during 2015 total P6,000,000. The board of directors declares a cash dividend totaling P2,800,000 to be paid as appropriate to preferred and ordinary shareholders. Later, a share dividend of 10 percent is declared on ordinary shares. The market value of ordinary shares is P68 per share on the date the share dividend is declared. b. In order to familiarize shareholders with one of the company’s new products, the board declares a property dividend of one ounce of new perfume the company produces for every ordinary share outstanding (before the above share dividend). The cost of the perfume is P0.60 per ounce, and the product has a wholesale market value of P1 per ounce. Any gain or loss on this transaction is already included in the earnings repor ted above. c.

At the end of 2015, the board declares in three-for two share split. With the split, the number of ordinary shares authorized to be issued is increased to 1,500,000. At the date of the share split, the market value of ordinary share is P75 per share.

Required: Compute the cost of the following: 1. Dividends-Preference shares a. 2,800,000

b. 1,600,000

c. P 800,000

d. 0

c. 7,460,000

d. 7,180,000

2. Dividends- Ordinary shares a. 2,420,000

b. 3,820,000

3. The amount to be charged to Retained Earnings as a result of property dividend is a. 700,000

b. P 420,000

c. 280,000

d. 462,000

4. The number of ordinary shares issued and outstanding at the end of 2015 is 5. a. 1,540,000

b. 1,155,000

c. P 770,000

d. 700,000

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AUDIT OF STOCKHOLDER EQUITY – PROBLEMS PROBLEM 1 You are engaged in the audit of WOODHAVEN Co., a new client at the close of its first fiscal year, April 30, 2014. The books had been closed prior to the time you began your year-end field work. Shown below are the shareholders’ equity accounts in the general ledger.

Sept 14, 2013 CD

110,000

April 28, 2014

Retained Earnings 109,000

April 30, 2014 J April 30, 2014 J

Income Summary 5,200,000 800,000

May 1, 2013 CR April 28, 2014

1,200,000 109,000

February 2, 2014 CR April 30, 2014

52,500 800,000

April 30, 2014 J

6,000,000

Additional information is as follows: A. From the articles of incorporation: Authorized share capital

30,000 shares

Par value per share

P100

B. Director’s minutes include the following resolutions: April 30, 2013

Authorized the issue of 10, 000 shares at P120 per share.

Sept 13, 2013

Authorized the acquisition of 1,000 shares at P110.

Feb 01, 2014

Authorized the reissue of 500 treasury shares at P105.

April 28, 2014

Declared a 10% stock dividend, payable May 31, 2014, to shareholders Of record as of April 30,2014. The market value of the WOODHAVEN Co. stock on April 28,2014,was P 130 per share.

Based on the above information, determine the correct balances of the following accounts April 30,2014. 1. Ordinary Share Capital a. P 1,199,00 b. P 1,000,00 2.

c. 1,1000,000

d. P 900,000

c. P 50,000

d. P 55,000

c. P 228,500

d. P200,00

c. P 676,500

d. 797,500

c. P 109,000

d. P0

Treasury Shares a. P110,00

b. P 100,00

3. Share Premium a. P 226,000 b. 231,000 4. Retained Earnings a. P619,000

b. P 800,000

5. Stock Dividends Payable a. P 123,500 b. P 95,000

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PROBLEM 2 COLDSPRING Corp. ., organized on June 1, 2014, was authorized to issue shares as follows: 

800,000 shares of 9% preference shares, convertible, P100 par



2,500,000 ordinary shares, P2.50 stated value

During the remainder of the fiscal year ended May 31, 2013, the following transactions were completed in the order given: 

300,000 shares of preference shares were subscribed for at P105, and 900,000 ordinary shares were subscribed for at P26. Both subscriptions were payable 30% upon subscription, the balance in one payment.



The second subscription payment was received, except one subscriber for 60,000 ordinary shares payment was received, except one subscriber for 60,000 ordinary shares defaulted on payment. The full amount paid by this subscriber was returned, and all of the fully paid shares was issued.



150,000 ordinary shares were reacquired by purchase at P28.



Each preference share was converted into four ordinary shares.



The treasury share was exchanged for m achinery with a fair market value of P4,3000,000 .



There was a –for-1 share split, and the stated value of the new ordinary share is P1.25.



Net income was P830,000.

QUESTIONS: Based on the above and the result of your audit, determine the following as of December 31, 2013: 1. Ordinary Share Capital a. 2,550,000

b. 2,100,000

c. P 5,100,000

d. 4,200,000

b. 48,340,000

c. P 48,808,000

d. 748,240,000

c. P 55,990,000

d. 53,340,000

c. P 56,820,000

d. 54,170,000

2. Total Share Premium a. 50,890,000

3. Total Contributed Capital a. 53,908,000

b. 53,440,000

4. Total Shareholders’ equity a. 54,270,000

b. 54,738,000

PROBLEM 3 The following information about a share based compensation of UNIONDALE Company: Vesting condition -

Continued employment for three years

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-

Share options can be exercised if the share price increases from P100 on Jan. 1, 2012 to P130 on Dec.31, 2014. The options can be exercised anytime during the next seven years

Assumptions: -

10,000 share options granted to senior executives on Jan. 1, 2012

-

All senior executives are still in service as of Dec. 31, 2014

-

The entity uses a pricing model that takes into account the possibility that the share price will exceed P130 on De. 31, 2014.

-

FV of option using this market condition is P48 per option.

1. How much should be recognized as expense in 2014 assuming the share price increases by a. P 0

b. P 160,000

c. P 320,000

d. P 480,000

2. How much should be recognized as expense in 2014 assuming the share price does not increase by P100? a. P 0

b. P 160,000

c. P 320,000

d. P 480,000

PROBLEM 4 On January 1, 2009, BRENTWOOD Ltd. Granted stock options to its chief executive officer (CEO). This is the only stock option plan that BRENTWOOD offers. The details of the stock options are set out below: Option to purchase Option price per share Market price per share at grant date Stock options expire

5,000 no-par-value common shares P62.00 P57.00 The Earlier of 8 years after issuance or the employee’s cessation of employment with the company for any reason other than =retirement.

The Options are first exercisable

The earlier of 4 years after issuance or the date on which an employee reaches the retirement age of 65.

Fair value at grant date, as determined By using a binomial valuation model

P10.00

On January 1, 2014, 4,000 of the options were exercised when the market price of the common shares was P78.00. The rest of the options were allowed to expire. 1. Compute the amount of compensation expense to be re cognized in 2009. a. P 50,000

b. P 40,000

c. P 10,000

d. P 12,500

2. The journal entry to record the exercise of 400 options on January 1, 2014 will require a. a debit to cash of P312,000

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b. a debit to Additional paid-in capital of P40,000 c.

a credit to Ordinary share capital of P40,000

d. a credit to Additional paid-in capital of P248,000 PROBLEM 5 Retained Earnings account of ELLENVILLE Co., follows: Date 01/01/11 06/30/11 12/31/11 02/07/13 04/03/13 09/30/13 12/31/13 12/31/13 07/01/14 12/31/14

Particulars Balance Dividends Paid Net income for the year Premium on capital stock Loss on sale of land Dividends pair Net income of the year Revaluation surplus Gain on sale of Treasury Stock Net income for the year Unrealized loss on AFS securities

Debit

Credit P80,600

P25,000 42,500 10,000 5,000 20,000 5,800 40,000 1,600 33,700 3,400

What is the correct balance of the Retained Earnings account on December 31, 2014? a. P 112,600

b. 117,600

c. P 123,200

d. P 111,800

PROBLEM 6 The following information has been taken from the ledger ac counts of FRANKLIN SQUARE Corp. Total income since incorporation Total cash dividends paid Proceeds from sale of donated stock Total value of stock dividends distributed Gains on treasury stock transactions Unamortized discount on bonds payable Treasury stock Appropriated for plant expansion Unpaid cash dividends

P317,000 60,000 40,000 30,000 18,000 32,000 20,000 70,000 24,000

REQUIRED: Determine the current balance of inappropriate retained earnings. a. P 203,000

b. P 113,000

c. P 133,000

d. none of these

PROBLEM 7 RFM Company entered into a contract with a customer to supply and install a machine on January 1, 2014 and to service the machine on July 1, 2014 and January 1, 2015. The cost of the machine to RFM is P80,000. It is possible for a customer to purchase both the machine and the maintenance services separately.

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The customer is contractually obliged to pay RFM P200,000 on January 1, 2015. The prevailing rate for one year credit granted to trade customers in the industry is 5% per six-month period. Experience has shown that the servicing of a machine of the model sold to the customer is expected to cost RFM P15,000 to perform the first service and P25,000 to perform the second service. When RFM provides machine services to customers in a separate transaction, it earns a margin of 50% on cost. On January 1, 2014, the cash selling price of a machine of the mo del sold to the customer is 125,964. Required: 1. The amount of income that should be recognized on the sale of machine in 2014 is: a. P 125,964

b. P 200,000

c. P 185,000

d. P 160,000

2. The amount of income that should be recognized on the sale of services in 2014 is: a. P 25,000

b. P 15,000

c. P 22,500

d. P 37,500

3. The amount of income that should be recognized o n the sale of services in 2015 is: a. P 25,000

b. P 15,000

c. P 22,500

d. P 37,500

4. The amount of interest revenue that should be r ecognized in 2014 is: a. P 6,298

b. P 7,738

c. P 14,036

d. P 0

5. The amount of interest revenue that s hould be recognized in 2015 is: a. P 6,298

b. P 7,738

c. P 20,000

d. P 0