Bonds Payable

PROBLEM 1

On January 1, 2022, Instagram Company issued 10% bonds with the principal amount of P 50Million, dated January 1. The bonds mature in December 31, 2024. The market yield for bonds of similar risks and maturity is 12%. Interest is paid semiannually.

1.Determine the price of the bonds and prepare journal entry for Instagram.

2.Assume that the market rate is 9%, determine the price of the bonds and prepare journal entry for Instagram

3.Assume that Broadband Company purchased the entire bonds, using the requirements in no.2 above, prepare the journal entry for Broadband.

PROBLEM 2

On January 1, 2022, Break Corporation issued a 10%, P 160 Million bonds, for P 140 Million to yield 12%. Interest is paid semiannually on June 30 and December 31. Break's financial statements ends on September 30.

1.What amount(s) related to the bonds would Break report in its financial position at September 30, 2022 and September 30, 2023.

2.What amount(s) related to the bonds would Break report in its financial results at September 30, 2022 and September 30, 2023.

3.What amount(s) related to the bonds would Break report in its cash flow at September 30, 2022 and September 30, 2023.