Charisma Company

Required 1

Date Interest received Interest income Discount amortization Carrying amount

1/1/2020
12/31/2020 160,000 190,050 30,050
12/31/2021 160,000 193,055 33,055
12/31/2022 160,000 196,395 36,395

14pts
 Required 2 Debit Credit
2020
Carrying amount Jan-01 Investments in bonds 1,900,500
1,900,500 Cash 1.900,500
1,930,550
1,963,605 Dec-31 Interest income 160,000
2,000,000 Cash 160,000

31 Investment in bonds 30,050

Interest income 30,050

2021
Dec-31 Cash 160,000
Interest income 160,000

31 Investment in bonds 33,055

Interest income 33,055

2022
Dec-31 Cash 160,000
Interest income 160,000

31 Investment in bonds 36,395

Interest income 36,395

31 Cash 2,000,000
Investment in bonds 2,000,000
Charisma Company

Required 1

Date Interest received Interest income Discount amortization Carrying amount

1/1/2020
12/31/2020 160,000 190,050 30,050
12/31/2021 160,000 193,055 33,055
12/31/2022 160,000 196,395 36,395

94,000 100,000
 Required 2 Debit Credit
2020
Carrying amount Jan-01 Investments in bonds 1,900,500
1,900,500 Cash 1.900,500
1,930,550
1,963,605 Dec-31 Interest income 160,000
2,000,000 Cash 160,000

31 Investment in bonds 30,050

Interest income 30,050

2021
Dec-31 Cash 160,000
Interest income 160,000

31 Investment in bonds 33,055

Interest income 33,055

2022
Dec-31 Cash 160,000
Interest income 160,000

31 Investment in bonds 36,395

Interest income 36,395

31 Cash 2,000,000
Investment in bonds 2,000,000
Demeanor Company

Required 1

Date Interest received Interest income Discount amortization Carrying amount

1/1/2020
12/31/2020 300,000 379,360 79,360
12/31/2021 300,000 385,709 85,709
12/31/2022 300,000 392,931 92,931
 Required 2 Debit Credit
2020
Carrying amount Jan-01 Investments in bonds 4,742,000
4,742,000 Cash 4,742,000
4,821,360
4,907,069 Dec-31 Cash 300,000
5,000,000 Interest income 300,000

31 Investment in bonds 79,360

Interest income 79,360

2021
Dec-31 Cash 300,000
Interest income 300,000

31 Investment in bonds 85,709

Interest income 85,709

31 Cash 5,500,000
Investment in bonds 4,907,069
Gain on sale of bond investment 592,931

Sale price 5,500,000

Carryin amoount 4,907,069
Gain on sale 592,931
Enormous Company

Required a
2020
Feb-01 Investment in bonds 5,486,000
Cash 5,486,000

Dec-31 Accrued interest receivable 660,000

Interest income (6,000,000 x 12% x 11/12) 660,000

31 Investment in bonds 94,235

Interest income (102,900 x 11/12) 94,235

Required b
2021
May-01 Investment in bonds (118,335 x 3/12) 29,584
Interest income 29,584

1 Cash (6,300,000 + 180,000) 6,480,000

Investment in bonds 5,618,484
Interest income (6.000.000 x 12% x 3/12) 180,000
Gain on sale of bonds 681,516

Carrying amount – February 1, 2020 5,588,900

Add: Discount amortization from February 1, 2020 to
May 1, 2020 (3/12 x 118,335) 29,584
Carrying amount, May 1, 2020 5,618,484

Selling price (6.000,000 x 105%) 6,300,000

Less: Carrying amount 5,618,484
Gain on sale 681,516
 12% 15%
Date Interest received Interest income Discount amortization Carrying amount
1/2/2020 5,486,000
1/2/2021 720,000 822,900 102,900 5,588,900
1/2/2022 720,000 838,335 118,335 5,707,235
Fancy Company
Debit Credit
2020
Jan-01 Investment in bonds 8,598,400
Cash 8,598,400

Dec-31 Cash (12% x 8,000,000) 960,000

Interest income 960,000

31 Interest income 100,160

Investment in bonds 100,160

Interest received 960,000

Interest income (10% x 8,598,400) 859,840
Premium amortization 100,160
Flexible Company
Debit Credit
2020
Jan-01 Investment in bonds 5,241,500
Cash 5,241,500

Dec-31 Cash (5,000,000 x 12%) 600,000

Interest income 600,000

Dec-31 Interest income 75,850

Investment in bonds 75,850

Interest received 600,000

Interest income (10% x 5,241,500) 524,150
Premium amortization 75,850

Dec-31 Cash 1,000,000

Investment in bonds 1,000,000

2021
Dec-31 Cash (4,000,000 x 12%) 480,000
Interest income 480,000

31 Interest income 63,435 7pts

Investment in bonds 63,435

Interest received 480,000

Interest income (10% x 4,165,650) 416,565
Premium amortization 63,435

31 Cash 1,000,000
Investment in bonds 1,000,000
Gallant Company

Required1 Debit Credit

1 Investment in bonds 7,679,000

Cash 7,679,000

2 Cash (10% x 8,000,000) 800,000

Interest income 800,000

3 Investment in bonds 121,480

Interest income 121,480 5pts

Interest income (7.679,000 x 12%) 921,480

Interest received (8,000,000 x 10%) 800,000
Discount amortization 121,480

4 Cash 2,000,000
Investment in bonds 2,000,000

Required2
Cost 7,769,000
Discount amortization 121,480
Annual installment (2.000,000)
Carrying amount - 12/31/2020 5,800,480
Agusan Company

Required a
6% 8%
Date Interest received Interest income Discount amortization Carrying amount
1/1/2020 4,742,000
12/31/2020 300,000 379,360 79,360 4,821,360
12/31/2021 300,000 385,709 85,709 4,907,069
12/31/2022 300,000 392,931 92.931 5,000,000

23pts
Required b
2020
Jan-01 Financial asset -- FVOCI
Cash

Dec-31 Cash
Interest income

31 Financial asset FVOCI

Interest income

31 Financial asset - FVOCI

Unrealized gain OCI

Market value - 12/31/2019 (5,000,000 x 105%)

Carrying amount - 12/31/2019
Unrealized gain - December 31, 2019

2021
Dec-31 Cash
Interest Income

31 Financial asset - FVOCI

Interest income

31 Financial asset FVOCI

Unrealized gain - OCI

Market value - 12/31/2020

Carrying amount per book - 12/31/2020 (5,250,000 +85,709)
Increased in unrealized gain - 2020

2022
Dec-31 Cash
Interest income

31 Financial asset FVOCI

Interest income

31 Cash
Unrealized gain– OCI
Financial asset - FVOCI
 Debit Credit

4,742,000
4,742,000

300,000
300,000

79,360
79,360

428,640
428,640

5,250,000
-4,821,360
428,640

300,000
300,000

85,709
85,709

164,291
164,291

5,000,000
5,335,709
164,291

300,000
300,000

92,931
92,931

5,000,000
592,931
5,592,931
Reign Company
Debit Credit
2020
Jan-01 Financial asset - FVPL Cash 5,380,000
Financial asset - FVPL Cash 5,380,000

Dec-31 Cash (12% x 5,000,000) 600,000

Interest income 600,000

31 Financial asset - FVPL 620,000

Gain from change in fair value 620,000
(6,000,000 - 5,380,000)

2021
Dec-31 Cash 600,000
Interest income 600,000

31 Loss from change in fair value 250,000

Financial asset - FVPL 250,000
(6,000,000 - 5,750,000)
Havoc Company

Required a

Present value of principal (5,000,000 x 0.377) 1,885,000

Present value of semi annual interest (200,000 x 12.462) 2,492,400
Purchase price 4,377,400

Date Interest received Interest income Amortization Carrying amount

Jan-01
Jun-30 200,000 218,870 18,870
Dec-31 200,000 219,814 19,814
 Required b Debit Credit

Jan-01 Investment in bonds 4,377,400

Cash 4,377,400

Jun-30 Cash 200,000

Carrying amount Interest income 200,000
4,377,400
4,396,270 30 Investment in bonds 18,870
4,416,084 Interest income 18,870

Dec-31 Cash 200,000

Interest income 200,000

31 Investment in bonds 19,814

Interest income 19,814
Impasse Company

Required a

Present value of principal (4,000,000 x 0.567) 2,268,000

Present value of semi annual interest (640,000 x 3.605) 2,307,200
Purchase price 4,575,200

Date Interest received Interest income Premium amortization Carrying amount

1/1/2020
12/31/2020 640,000 549,024 90,976
12/31/2021 640,000 538,107 101,893
 Required b Debit Credit

Investment in bonds 4,575,200

Cash 4,575,200

Cash 640,000
Carrying amount Interest income 640,000
4,575,200
4,484,224 Investment in bonds 90,976
4,382,331 Interest income 90,976
Jest Company

Required a Required b

Present value of principal (8,000,000 x 0.6756) 5,404,800 Jan-01

Present value of semi annual interest (400,000 x 8.11) 3,244,000
Purchase price 8,648,800
Jul-01

Dec-31

31
Required b Debit Credit

Investment in bonds 8,648,800

Cash 8,648,800

Cash 400,000
Interest income 400,000

Interest income 54,048

Investment in bonds 54,048

Interest received 400,000

Interest income (8,648,800 x 8% x 6/12) 345,952
Premium amortization 54,048

Accrued interest receivable 400,000

Interest income 400,000

Interes Interest income 56,210

Investment in bonds 56,210

Interest accrued 400,000

Interest income (8,594,752 x 8% x 6/12) 343,700
Premium amortization 56,210

Acquisition cost January 1 8,648,800

Premium amortization from January 1 to June 30 -54,048
Carrying amount - June 30 8,594,752
Premium amortization from July I to December 31 -56,210
Carrying amount December 31 8,538 542
Labyrinth Company

Required1 Required2
2020
Principal payment 1,000,000 Jan-01
Interest payment (3,000,000 x 12%) 360,000
Total payment on December 31, 2020 1,360,000
Dec-31
Principal payment 1,000,000
Interest payment (2,000,000 x 12%) 240,000
Total payment on December 31, 2021 1,240,000 Dec-31

Principal payment 1,000,000

Interest payment (1,000,000 x 12%) 120,000
Total payment on December 31, 2022 1,120,000

December 31, 2020 payment (1,360,000 x .91) 1,237,600

December 31, 2021 payment (1,240,000 x .83) 1,029,200 31
December 31, 2022 payment (1,120,000 x .75) 840,000
Total present value on January 1, 2020 3,106,800
Required3
Required2 Debit Credit

Investment in bonds 3,106,800

Cash 3,106,800

Cash 360,000
Interest income 360,000

Interest income 49,320

Investment in bonds 49,320

Interest received 360,000

Interest income (3,106,800 x 10%) 310,680
Premium amortization 20,320

Cash 1,000,000
Investment in bonds 1,000,000

Required3
Acquisition cost - 1/1/2020 3,106,800
Premium amortization for 2020 -49,320
Annual installment -1,000,000
Carrying amount of investment - 12/31/2020 2,057,480