On January 1, 2020, Ellison Co. issued eight-year bonds with a face value of P1,000,000 and a stated interest

rate of 6%, payable semiannually on June 30 and December 31. The bonds were sold to yield 8%. Table values

are:

Present value of 1 for 8 periods at 6% ........................................... .627

Present value of 1 for 8 periods at 8% ........................................... .540

Present value of 1 for 16 periods at 3%.......................................... .623

Present value of 1 for 16 periods at 4%.......................................... .534

Present value of annuity for 8 periods at 6%................................... 6.210

Present value of annuity for 8 periods at 8%................................... 5.747

Present value of annuity for 16 periods at 3%................................. 12.561

Present value of annuity for 16 periods at 4%................................. 11.652

1. The present value of the principal is

2. The present value of the interest is

3. The issue price of the bonds is

On October 1, 2020 Mack Corporation issued 5%, 10-year bonds with a face value of P1,000,000 at 108 (a 4%

yield). Interest is paid on October 1 and April 1, with any premiums or discounts amortized on an effectiveinterest basis.

4. The entry to record the issuance of the bonds would include a credit of

a. P25,000 to Interest Payable c. P1,000,000 to Bonds Payable

b. P80,000 to Bonds Payable d. P1,080,000 to Bonds Payable.

5. Bond interest expense reported for the year 2020 is:

On January 1, 2021, Noodles Company issued serial bonds with a face value of P 3,000,000 and stated 12%

interest payable annually every December 31. The bonds have a yield rate of 10%. The bonds mature at an

annual installment of P1,000,000 every December 31. The rounded present value of 1 at 10% for one period is

0.91; for two periods is 0.83 and for three periods is 0.75.

6. What is the issue price of the serial bonds on January 1, 2021?

7. How much is the carrying value of the bonds on December 31, 2021?

On January 1, 2021, Hotdog Inc. issued P2,000,000 of 16% bonds at P102. Each P1,000 bond has one detachable

warrant that allows the holder to purchase ten shares of P 50 par value stock at P 70 per share. The bonds would

have been sold at 99 without the warrants.

8. What is the amount assigned to the warrants at the date of issuance?

On January 1, 2019, Athens Corporation issued its 8%, 5-year convertible debt instrument with a face amount of

P8,000,000 for P 7,700,000. Interest is payable every December 31 each year. The debt instrument is convertible

into 50,000 ordinary shares with a par value of P100. When the debt instruments were issued, the bonds without

the conversion option were sold for P7,393,312 yielding 10%. On December 31, 2021, P 4,000,000 of the

convertible debt instrument were converted.

9. How much is the gain or loss on conversion taken to profit or loss for the year 2021?

Kant Corporation retires its P100,000 face value bonds at 102 on January 1, following the payment of interest.

The carrying value of the bonds at the redemption date is P96,250.

10. The entry to record the redemption will include a

a. Debit of P5,750 to Loss on Extinguishment of Debt.

b. Debit of P96,250 to Bonds Payable.

c. Credit of P3,750 to Gain on Extinguishment of Debt.

d. Debit of P3,750 to Bonds Payable.