Question number 1.

Evanston manufacturing is faced with possible bankruptcy. Evanston has P 2 000 000 bonds outstanding with an unamortized premium of P 68 500. Futhermore, Evanston ia behind P 125 000 in interest payments. to satisfy the debt, evanston transfers 60 000 shares of P 10 par value stock with a current market value of P 33.75.

Blue Ash Corporation holds P 125 000 face value of the Evanston bonds. The carruing vakue and interest receivable on blue ash bond holdinfa are proportionate to the total issued.

A. What is the entries to record the equity transfer on the books of Evanston and Blue Ash?

Question number 2.

On january 1 20x1 the terms of an entity exiating loan payable is modified as follows:

The principal is reduced from P 3 000,000 to P 2 800 000.

The bank promises not to collect the accrued interesr of P 200 000.

The nominal rate is decreased from 12% to 8%.

The maturity date is extended from December 31 20x1 to January 1 20x6.

The principal is due in lump sum at maturity date but interest is payable annually at each yaer end. The original effective interest rate 12%. The prevaiking rate on december 31 20x1 is 9%.

A. What is the entries on january 1, 20x1 and December 20x1?

Question number 3. An entity has defaulted in its two annual interest payments on an existing loan payable. Because of the default, the lender agrees to the following restructuring of the loan on December 31 20x1.

a. the lender dorgoes the oayment of the accrued simple interest and any future interests.

b. the principal will be due in four equal annual payment of P 1 000 000 at each year end starting on December 31 20x1. Originally the P 4 000 000 principal amount is due in lump sum on decmber 31 20x1.

c. the nominal rate on the origibal loan is 10%. the current market rate on december 31 20x1 is 12%.

A. what is the entry to record the restructuring of the loan payable?

B. what is the interest expense?

Question number 4. On january 1 20x1 RESTRAIN TO CURB CO issued 1000, P 2 000, 10% 3 year bonds for P 1 903 927. Principal is due on December 31 20x3 but interest are due annually every year end. the effective rate is 12%.

A. what is the pertinent entries?