Journal Entries:

a. No entry
b. No entry

Debit Credit
c. Inventory 200,000
Accounts Payable 200,000
d. Investment property (2.9m-2.8m) 100,000
Unrealized gain 100,000
e. Depreciation exp.-building 405,000
Accu.Depreciation-building 405,000
(4,500,000-450,000 x 10%)
f. Depreciation exp.-equipment 320,000
Accu.Depreciation-equipment 320,000
g. Amortization expense 30,000
Accu.Depreciation 30,000
h. Inventory 108,000
Interest expense 108,000
Borrowing cost eligible for capitalization:
(1,8000,000 /2 ) x 12% P 108,000
i. Discount on bonds payable 932,392
Cash 932,392
Interest expense 189,465
Discount on bonds payable 189,465
Issue price computation:
Principal PV of 14% n=4 x 59,208 P 4,336,640
Interest PV @ 14% n=4 x 2.91371 2,330,968
Total: P 7,067,608
Amortization table:
Payment Int. Exp. Amortization PV
1/1/1 P 7,067,608
12/31/1 800,000 989465 189,465 7,257,073
j. Utility expense 360,000
Accrued liability 360,000
k. Income tax 719,861
Current tax 719,861