A. Assume the same information in W10-4, except that Foreman uses the effective interest method of amortization for bond premium or discount. Assume an effective yield of 9.7705%

Instructions:

Help me to prepare the journal entries to record the following:

(a) The issuance of the bonds

(b) The payment of interest and the related amortization on July 1, 2019

(c) The accrual of interest and the related amortization on December 31, 2019.

b. CityMall Inc had an outstanding P5, 000,000 of 11% bonds (interest payable July 31 and January 31) due in 10 years. On July 1, it issued P7, 000,000 of the 10% 15 year bonds (interest payable July 1 and January 1) at P98. A portion of the proceeds was used to call the 11% bonds at P102 on August 1. Unamortized bond discount and issue cost applicable to the 11% bonds were P120, 000 and P300, 000, respectively.

Prepare the journal entries necessary to record issue of the new bonds and the refunding of the bonds.

C.Fall Corporation, in preparation of its December 31, 2018, financial statements, is attempting to determine the proper accounting treatment for each of the following situations.

1. As a result of uninsured accidents during the year, personal injury suits for P350,000 and P60,000 have been filed against the company. It is the judgment of Fall's legal counsel that an unfavorable outcome is unlikely in the P60, 000 case but that an unfavorable verdict approximating P250, 000 will probably result in the P350, 000 case.

2. Fall Corporation owns a subsidiary in a foreign country that has a book value of P5,725,000 and an estimated fair value of $9,500,000. The foreign government has communicated to Fall its intention to expropriate the assets and business of all foreign investors. On the basis of settlements other firms have received from this same country, Fall expects to receive 40% of the fair value of its properties as final settlement.

3. Fall's chemical product division consisting of five plants is uninsurable because of the special risk of injury to employees and losses due to fire and explosion. The year 2018 is considered one of the safest