lOMoARPSD8 7 9
intermediate acctg quiz 1
intermediate acctg (Mater Dei College)
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lOMoARPD8 7 9
On July 1, 2021, Cagayan Company paid P9,585,000 for 10% bonds with a face amount of of P8,000,000. P8,000,000. Interest is paid on on June 30 30 and December 31. The bonds bonds were wer e purch purchase ased d to yiel yield d 8%. Caga Cagaya yan n uses uses the the effe effecti ctive ve interest interest method method to recogni reco gnize ze interest interest income from this investme investment. nt. What should should be reported reported as the carrying amount of the bonds in the December 31, 2021, balance sheet? {=9,568,400 ~9,601,600 ~9,551,800 ~9,618,200} On July July 1, 2021 2021,, Tugueg uguegar arao ao Compa Company ny purch purchas ased ed as a long-t long-term erm inves investme tment nt P8,000,0 P8,0 00,000 00 of Candon Candon Company Company’s ’s 8% bonds bonds for P7,570, P7,570,000, 000, includin including g accrued accrued interest of P320,000. P320,000. The bonds bonds were purchased purchased to to yield 10% interest. interest. The bonds bonds pay interest annually on December 31. Tuguegarao uses the interest method. In its Decembe Dec emberr 31, 2021 balance balance sheet, sheet, what what amount amount should should Tugue Tuguegara garao o report report as investment in bonds? {=7,292,500 ~7,207,500 ~7,628,500 ~7,335,000} Invest Inv estmen mentt in bonds: bonds: Solo Solo Co. purch purchas ased ed
₱300,0 300,000 00
bonds bonds for for
₱315,0 315,000. 00.
The The
securities are to be held until maturity to collect the contractual cash flows. The entry to record the investment includes __ {~a debit to Held-for-Trading Securities at ₱300,000. ~a credit to Premium on Investments of ₱15,000. =a debit to Investment in bonds measured at amortized cost for ₱315,000. ~none of these.} Investment in bonds: On January 1, 20x1, Kevin Co. acquired 12%, P4,000,000 bonds for P4,198,948. P4,198,948. The principal principal is due on December December 31, 20x3 but interest interest is made annually starting December 31, 20x1. The effective effective interest rate on the bonds is 10%. How much is the interest income recognized in 20x1? {= {=419,895 419,895 ~407,273 ~413,884 ~480,000} Investment in bonds: On January 1, 20x1, Kevin Co. acquired 12%, P4,000,000 bonds for P4,198,948. P4,198,948. The principal principal is due on December December 31, 20x3 but interest interest is made annually starting December 31, 20x1. The effective effective interest rate on the bonds is 10%. How much is the carrying amount of the investment on December 31, 20x1? {~4,198,948 ~4,072,727
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=4,138,843 ~4,000,000} Investment in bonds: On January 1, 20x1, Kevin Co. acquired 12%, P4,000,000 bonds for P4,198,948. P4,198,948. The principal principal is due on December December 31, 20x3 but interest interest is made annually starting December 31, 20x1. The effective effective interest rate on the bonds is 10%. The amortization for 20x1 is__ Note: Do not round off the PV factors. Multiply the PV factor computed directly to the amounts then round off the final answer. {=60,105} On January 1, 2021 Aparri Company purchased 5-year bonds with face value of P8,000,000 and stated interest of 10% per year payable semiannually January 1, and July 1. The bonds were acquired to yield 8%. Present value factors are: Present value of 1 for 10 periods at 5% 0.614 Present value of 1 for 10 periods at 4% 0.675 Present value of an annuity of 1 for 10 periods at 5% 7.722 Present value of an annuity of 1 for 10 periods at 4% 8.11 8.111 What is the purchase price of the bonds? {=8,644,400} On July 2, East Co. purchased, asfor a long-term amount, 8%20x1, bonds of Rand Corporation P461,500 investment, to yield 10%P500,000 per year. face The bonds pay interest semiannually semiannually on January January 1 and July 1. In its December December 31, 20x2 balance sheet, East should report interest receivable of __ {=20,000} On Janua anuary ry 1, 20x1 20x1,, MH Comp Compan any y acqu acquir ired ed 10%, 10%, P2,0 P2,00 00,00 0,000 0 bond bonds s for for P1,903,926. The principal is due on January 1, 20x4 but interest is due annually starting December 31, 20x1. The yield rate on the bonds is 12%. The bonds were classified as investment measured at amortized cost. On Sept Septem embe berr 1, 20x2 20x2,, MH Comp Compan any y chan change ged d its its busi busine ness ss mode model. l. It was was ascertained that the investment should be reclassified to held for trading securities. The quoted prices were 101, 103 and 104 on September 1, 20x2, December 31, 20x2, and January 1, 20x3, respectively. MH Company reports only on an annual basis. What is the gain on reclassification? {= 115,714} On Ja Janu nuar ary y 1, 20x1 20x1,, ABC ABC Comp Compan any y acqu acquir ired ed 14%, 14%, P2,0 P2,000 00,0 ,000 00 bond bonds s for for P1,996,073. The bonds mature on December 31, 20x3 and pay annual interest every December 31. ABC Company incurred transaction costs of P100,000 on the acquisition. acquisitio n. The bonds are held under “hold to collect and sell” business model. The ef effe fecti ctive ve intere interest st rate rate adju adjuste sted d for the the effe effect ct of the transa transacti ction on costs costs is 12 12%. %. Information on fair values at December 31 for each year are as follows: 20x1 – 102
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20x2 – 104 20x3 – 100 What is the carrying amount of the investment on December 31, 20x2? {=2,080,000}
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