1. On July 1, 2020, Matcha, Inc. acquired as a long-term investment for P1,600,000, a 40% interest in Milk Tea Company when the fair value of Milk Tea's net assets was P4,000,000.  Due to the COVID-19 pandemic, Milk Tea Company experienced difficulty in continuing its business and reported the following net losses:
 

• 2020- P1,000,000
• 2021- P1,400,000
• 2022- P1,800,000
• 2023- P800,00
  
  What amount should be reported as share in loss from investment in associate for the year 2023?

a.  P120,000

b. P80,000

c. P280,000

d. P320,000

2. .MILK TEA Company issued a 2-year, P100,000 face value note payable. Interest of 7% per annum is deducted in advance. The effective interest rate for the discounted note is 7.8328%. The note was issued on January 1, 2022. PV of 1 at 7% for 2 periods is 0.87 and PV of 1 at 7.8328% for 2 periods is 0.86. 

 

How much is the interest expense for 2022?

 

a. P7,833

b. P7,000

c. P6,020

d. P6,736

 

3. Sold bonds at 98 plus accrued interest of P8,000. The broker deducted P400 for brokerage fees and taxes, remitting the balance. The bonds were carried at P489,000 at the time of the sale. 

 

The correct entry for the transaction is?

 

a. Dr. Cash- P498,000; Cr. Interest Revenue- P8,000; Cr. Investment in Blue Corp. Bonds- P489,000; Cr. Gain on Sale of Investments- P1,000

b. Dr. Cash- P497,600; Cr. Interest Revenue- P8,000; Cr. Investment in Blue Corp. Bonds- P489,000; Gain on Sale of Investments- P600

c. Dr. Cash- P498,400; Cr. Interest Revenue- P8,000; Investment in Blue Corp. Bonds- P489,000; Cr. Gain on Sale of Investments- P1,400

d. Dr. Cash- P500,000; Cr. Interest Revenue- P8,000; Cr. Investment in Blue Corp. Bonds- P489,000; Cr. Gain on Sale of Investments- P3,000