TYPED SOLUTION ONLY

On November 1, 2021, Mason Company issued P8,000,000 of its 10 year, 8% term bonds dated October 1, 2021. The bonds were sold to yield 10% with total proceeds of P7,000,000 plus accrued interest. Interest is paid every February 1 and August 1. Mason Company reports on a fiscal year ending every July 31 and amortizes premiums, discounts and bond issue costs using the straight line method.

• On July 31, 2022, what amount should be reported as bonds liability?
• What interest expense relating to the bonds would be recognized by Mason in its income statement for the period ending July 31, 2022?
• The July 31, 2022 statement of financial position will show accrued interest relating to the bonds of: