PROB 7-2 WXY COMPANY

Requirement 1 amortization table

FV of
Dates Outstanding No. of Months Pesos Months Premium
July 1 - Dec 31, 2014 6,000,000.00 6 36,000,000.00 27,000.00
Jan 1 - Dec 31, 2015 6,000,000.00 12 72,000,000.00 54,000.00
Jan 1 - Dec 31, 2016 6,000,000.00 12 72,000,000.00 54,000.00
Jan 1 - May 1, 2017
May 2 - Dec. 31 2017
6,000,000.00
4,000,000.00
4
8
] 56,000,000.00 42,000.00

Jan 1 - May 1, 2018

May 2 - Dec. 31 2018
4,000,000.00
2,000,000.00
4
8
] 32,000,000.00 24,000.00

Jan 1 - May 1, 2019 2,000,000.00 4 8,000,000.00 6,000.00

May 2 - Dec. 31 2019 - 0 - -
58 276,000,000.00 207,000.00

Constant multiplier = 0.00075

*Short of one month because the bonds were issued only two months after the permit to
issue was secured from SEC

Requirement 2 JEs from July 1, 2014 to Dec. 31, 2018

2014
July 1 Cash 6,327,000.00
Bonds Payable 6,000,000.00
Premium on Bonds 207,000.00
Interest Expense (P6M x 12% x 2/12) 120,000.00
Issued bonds with premium and 2 months accrued interest

Dec 31 Interest Expense 480,000.00

Interest Payable 480,000.00
8 months accrual (P6M x 12% x 8/12)

31 Premium on Bonds 27,000.00

Interest Expense 27,000.00
2014 amortization

31 Income & Expense Summary 333,000.00

Interest Expense 333,000.00
Closing entry

2015
Jan 1 Interest Payable 480,000.00
Interest Expense 480,000.00
Reversing entry
PROB 7-2 WXY COMPANY
May 2 Interest Expense 720,000.00
Cash 720,000.00
Payment for 1 year interest (P6M x 12% x 1yr)

Dec 31 Interest Expense 480,000.00

Interest Payable 480,000.00
8 months accrual (P6M x 12% x 8/12)

31 Premium on Bonds 54,000.00

Interest Expense 54,000.00
2015 amortization

31 Income & Expense Summary 666,000.00

Interest Expense 666,000.00
Closing entry

2016
Jan 1 Interest Payable 480,000.00
Interest Expense 480,000.00
Reversing entry

May 2 Interest Expense 720,000.00

Cash 720,000.00
Payment for 1 year interest (P6M x 12% x 1yr)

Dec 31 Interest Expense 480,000.00

Interest Payable 480,000.00
8 months accrual (P6M x 12% x 8/12)

31 Premium on Bonds 54,000.00

Interest Expense 54,000.00
2016 amortization

31 Income & Expense Summary 666,000.00

Interest Expense 666,000.00
Closing entry

2017
Jan 1 Interest Payable 480,000.00
Interest Expense 480,000.00
Reversing entry

May 2 Interest Expense 720,000.00

Cash 720,000.00
Payment for 1 yr interest (P6M x 12% x 1yr)
PROB 7-2 WXY COMPANY
May 2 Premium on Bonds 6,000.00
Interest Expense 6,000.00
To update 4 months amortization for the P2M
retirement (P2M x 0.00075 x 4 months)

2 Bonds Payable 2,000,000.00

Cash 2,000,000.00
1st retirement

Dec 1 Interest Expense 140,000.00

Cash 140,000.00
Pmt of 7 months accrued interest (P2M X 12% X 7/12)

1 Premium on Bonds 16,500.00

Interest Expense 16,500.00
To update 11 months amortization for the P2M early
retirement (P2M x 0.00075 x 11 months)

1 Bonds Payable 2,000,000.00

Premium on Bonds (P2M x .00075 x 5 months) 7,500.00
Cash (P2M x 97%) 1,940,000.00
Gain on the Early Redemption of Bonds 67,500.00
Early retirement

31 Interest Expense 160,000.00

Interest Payable 160,000.00
8 months accrual (P2M x 12% x 8/12)

31 Premium on Bonds 18,000.00

Interest Expense 18,000.00
2017 amortization for the remaining bonds (P2M x 0.00075 x 12)

31 Gain on the Early Redemption of Bonds 67,500.00

Income & Expense Summary 432,000.00
Interest Expense 499,500.00
Closing entry

2018
Jan 1 Interest Payable 160,000.00
Interest Expense 160,000.00
Reversing entry

May 2 Interest Expense 240,000.00

Cash 240,000.00
Payment for 1 year interest (P2M x 12%)
PROB 7-2 WXY COMPANY
Dec 31 Interest Expense 160,000.00
Interest Payable 160,000.00
8 months accrual (P2M x 12% x 8/12)

31 Premium on Bonds 18,000.00

Interest Expense 18,000.00
2018 amortization (P2M x 0.00075 x 12 mos)

31 Income & Expense Summary 222,000.00

Interest Expense 222,000.00
Closing entry