Problem 1- San Francisco Marketing Company made investments in trading securities.An analysis of these investments on December 31, 2019 showed the following:

SecuritiesCostFair value

Manila Bottlers shares6,000 sharesP307,500P270,000

Baguio Inc. shares2,250 shares76,50090,000

Valenzuela Co. 12% bondsP300,000269,500280,600

TotalP653,500P640,600

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On April 1, 2020, the company purchased as a temporary investment, P200,000 face value, 9% Philippine treasury notes for P198,500, which includes accrued interest.The notes mature on July 1, 2020 and pay interest semiannually on January 1 and July 1.The notes were sold on December 1, 2021 for P206,500, which includes accrued interest.

On July 1, 2020, the shares of Baguio were sold for P70,000.On December 31, 2020, Manila Bottlers shares were quoted at P44 per share, Valenzuela bonds were quoted at P950 per P1,000 bond.

Questions:Based on the above and the result of your audit, answer the following:

1.The gain on sale of Philippine Treasury Notes on December 1, 2020 is

a.P500b.P8,000c.P5,000d.P12,500

2.The realized loss on sale of Baguio shares on July 1, 2020 is

a.P0b.P18,650c.P20,000d.P6,500

3.The interest income for the year 2020 is

a.P36,000b.PP48,000c.P37,500d.P24,000

4.The carrying amount of the trading securities on December 31, 2020 is

a.P533,500b.P577,000c.P520,025d.P549,000

5.The net unrealized loss that will be recognized in the 2020 profit or loss is

a.P2,800b.P1,600c.P15,100d.P0