BONDS PAYABLE Problem 9 On January 1, 2007, LACEA COMPANY issued 7% term bonds with a face amount of P1,000,000 due January 1, 2015. Interest is payable semiannually on January 1 and July 1. On the date of issue, investors were willing to accept an effective interest of 6%. Questions 1. The bonds were issued on January 1, 2007 at a. A premium b. An amortized value c. Book value d. A discount 2. Assume the bonds were issued on January 1, 2007, for P1,062,809. Using the effective interest amortization method, LACEA COMPANY recorded interest expense for the 6 months ended June 30, 2007, in the amount of a. P 70,000 3. b. P 63,769 c. P 35,000 d. P 31,884 Same information in number 2. LACEA COMPANY recorded interest expense for the 6 months ended December 31, 2007, in the amount of a. P 70,000 4. 5. b. P 63,769 c. P 31,884 d. P 31,791 The carrying value of the bonds on July 1, 2008 is: a. P 1,056,578 b. P 1,056,484 c. P 1,053,276 d. P 1,053,179 A bond issue sold at a premium is valued on the statement of financial position at the a. Maturity value. b. Maturity value plus the unamortized portion of the premium. c. Cost at the date of investment. d. Maturity value less the unamortized portion of the premium