Scarlet Erza Co. sells P600,000 of 12% bonds on June 1, 2018. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2023. The bonds yield 10%, selling for P638,780. On October 1, 2019, Scarlet Erza buys back P300,000 worth of bonds for P315,000 (includes accrued interest). Give entries through October 1, 2019.

Instructions

(Round to the nearest peso.) Prepare all of the relevant journal entries from the time of sale until the date indicated. Amortize premium or discount on interest dates and at year-end. (Assume that reversing entries were made.)