PROBLEM 5-3

1.

2020      
Apr. 1 Cash ₱ 4,850,000  
  Discount on bonds payable ₱ 100,000  
  Bond issue cost ₱ 50,000  
  Bonds payable   ₱ 5,000,000
Oct. 1 Interest expense ₱ 300,000  
  Cash (₱5,000,000 x 12% x 6/12)   ₱ 300,000
Dec. 31 Interest expense ₱ 150,000  
  Accrued interest payable (₱5,000,000 x 12%   ₱ 150,000
x3/12)
31 Interest expense ₱ 22,500  
  Discount on bonds payable (₱100,000/5 x 9/12)   ₱ 15,000
  Bond issue cost (₱50,000/5 x 9/12)   ₱ 7,500
2021      
Jan. 1 Accrued interest payable ₱ 150,000  
  Interest expense   ₱ 150,000
Apr. 1 Interest expense ₱ 300,000  
  Cash   ₱ 300,000
Jul. 1 Interest expense ₱ 15,000  
  Discount on bonds payable (₱20,000 x 6/12)   ₱ 10,000
  Bond issue cost (₱10,000 x 6/12)   ₱ 5,000
       
  Retirement price (₱2,000,000 x 99%)   ₱ 1,980,000
  Accrued interest Apr. – Jul, (₱2,000,000 x 12% x 3/12)   60,000
  Total payment   ₱ 2,040,000
       
  Bonds payable retired   ₱ 2,000,000
  Applicable discount (2/5 x ₱75,000) ₱ 30,000  
  Applicable issue cost (2/5 x ₱37,500) 15,000 ( 45,000 )
  Carrying amount of bonds retired   ₱ 1,955,000
  Retirement price   ( 1,980,000 )
  Loss on early retirement   ₱ 25,000
Jul. 1 Bonds payable ₱ 2,000,000  
  Interest expense ₱ 60,000  
  Loss on early retirement of bonds ₱ 25,000  
  Cash   ₱ 2,040,000
  Discount on bonds payable   ₱ 30,000
  Bond issue cost   ₱ 15,000
Oct. 1 Interest expense ₱ 180,000  
  Cash (₱3,000,000 x 12% x 6/12)   ₱ 180,000
Dec. 31 Interest expense ₱ 90,000  
  Accrued interest payable   ₱ 90,000
(₱3,000,000 x 12% x 3/12)
Dec. 31 Interest expense ₱ 9,000
  Discount on bonds payable (₱12,000 x 6/12)   ₱ 6,000
  Bond issue cost (₱6,000 x 6/12)   ₱ 3,000
       
  Revised annual amortization:    
  Discount (3/5 x ₱20,000)   ₱12,000
  Issue cost (3/5 x ₱10,000)   ₱ 6,000

2. Noncurrent liabilities:
  Bonds payable   ₱ 3,000,000
  Discount on bonds payable   ( 39,000 )
  Bond issue cost   ( 19,500 )
  Carrying amount   ₱ 2,941,500
 PROBLEM 5-11

Issue price (₱5,000 x 110% x ₱1,000)   ₱ 5,500,000

Accrued interest from July 1 to October 1, 2020 (₱5,000,000 x 12% x 3/12)   150,000
Total   ₱ 5,650,000
Bond issue cost   ( 200,000 )
Net cash received   ₱ 5,450,000 A.

PROBLEM 5-17

Face amount   ₱ 3,000,000

Multiply by: Interest rate   12%
Interest expense   ₱ 360,000
Multiply by: July 1 - Sept. 30, 2020   3/12
Accrued interest payable   ₱ 90,000 D.

Additional Question:
2020      
Jan. 31 Cash ₱ 3,000,000  
  Bonds Payable   ₱ 3,000,000

PROBLEM 5-19

Bonds Payable   ₱ 8,000,000

Discount on bonds payable   430,000
Carrying amount   ₱ 7,570,000
     
Carrying amount retired (₱4,00,000/₱8,000,000 x ₱7,570,000)   ₱ 3,785,000
Retirement price (₱4,000,000 + ₱100,000)   4,100,000
Loss on early extinguishment   ₱ 315,000 D.

PROBLEM 5-22

1. Face amount   ₱ 8,000,000

Multiply by: Interest rate   10%
Interest expense   ₱ 800,000 A.

2. Carrying amount 1/1/2020   ₱ 7,600,000

Carrying amount 12/31/2020   8,400,000
Increase in liability   ₱ 840,000
Loss on credit risk   150,000
Loss from change in fair value   ₱ 650,000 B.

3. Face amount   ₱ 8,000,000

Multiply by: rate   105%
Carrying amount 12/31/2020   ₱ 8,400,000 C.

4.      
2020      
Jan. 1 Cash ₱ 7,600,000  
  Bonds payable   ₱ 7,600,000
1 Transaction cost ₱ 150,000  
  Cash   ₱ 150,000
Dec. 31 Interest expense ₱ 800,000  
  Cash   ₱ 800,000
31 Loss on credit risk ₱ 150,000  
  Loss on change in fair value ₱ 650,000  
  Bonds payable   ₱ 800,000