Problem 6-1

1.)

GENERAL JOURNAL
Date Page Number 01
Descriptions PR Debit Credit
31-Dec Equipment Php 1,639,224
Discount on Notes Payable 760,776
Notes Payable Php 2,400,000

2.)
Equipment Php 1,639,224
Accumulated Depreciation for 2 years (535,690)
Equipment's Book Value 12/31/20 Php 1,103,534

3.)
Present value of the note Php 1,639,224
Interest Expense - 2020 163,992
Interest Expense - 2021 180,315
Carrying value of the Notes Payable - 12/31/20 Php 1,983,461

Problem 6-2

1.)
GENERAL JOURNAL
Date Page Number 01
2020 Descriptions PR Debit Credit
1-Aug Cash Php 9,200,000
Discount on Notes Payable 800,000
Notes Payable Php 10,000,000

2.)
GENERAL JOURNAL
Date Page Number 01
2020 Descriptions PR Debit Credit
31-Dec Interest Expense Php 5,000,000
Discount on Notes Payable Php 5,000,000
3.)
Notes Payable Php 10,000,000
Discount on Notes Payable 300,000
Carrying amount of the Notes Payable - 12/31/20 Php 9,700,000

4.)
GENERAL JOURNAL
Date Page Number 01
2021 Descriptions PR Debit Credit
1-Apr Notes Payable Php 10,000,000
Interest Expense 300,000
Cash Php 10,000,000
Discount on Notes Payable 300,000

5.)
GENERAL JOURNAL
Date Page Number 01
2021 Descriptions PR Debit Credit
1-Aug Cash Php 10,000,000
Notes Payable Php 10,000,000

6.)
GENERAL JOURNAL
Date Page Number 01
2020 Descriptions PR Debit Credit
31-Dec Interest Expense Php 500,000
Accrued Interest Payable Php 500,000

7.)
GENERAL JOURNAL
Date Page Number 01
2020 Descriptions PR Debit Credit
31-Dec Notes Payable Php 10,000,000
 Interest Expense 300,000
Accrued Interest Payable 500,000
Cash Php 10,800,000

Problem 6-3

1.)
GENERAL JOURNAL
Date Page Number 01
Descriptions PR Debit Credit
Notes Payable Php 7,500,000
Accrued Interest Payable 600,000
Loss on Extinguishment of Debt 2,025,000
Ordinary Shares issued Php 3,375,000
Preference Shares issued 3,375,000
Share Premium - Ordinary Shares 562500
Share Premium - Preference Shares 2,812,500

Notes Payable Php 7,500,000

Accrued Interest Payable 600000
Carrying Amount of the Notes Payable
8100000
Fair Value of Ordinary Shares Issued
(6750000)
Fair Value of Preference Shares Issued
(3375000)
Loss on Extinguishment of Debt
( Php 2,025,000)

2.)
GENERAL JOURNAL
Date Page Number 01
Descriptions PR Debit Credit
Notes Payable Php 7,500,000
Accrued Interest Payable 600,000
Ordinary Shares issued Php 3,375,000
Preference Shares issued 562,000
Share Premium - Ordinary Shares 1,425,000
Share Premium - Preference Shares 1,837,000

Gain on Extinguishment of Debt 900,000

 Notes Payable Php 7,500,000
Accrued Interest Payable 600,000
Carrying Amount of the Notes Payable
8,100,000
Fair Value of the Notes Payable (7,200,000)
Gain on Extinguishment of Debt
Php 900,000

3.)
GENERAL JOURNAL
Date Page Number 01
Descriptions PR Debit Credit
31-Dec Notes Payable Php 7,500,000
Accrued Interest Payable 600,000
Ordinary Shares Issued Php 3,375,000
Preference Shares Issued 2,025,000
Share Premium - Ordinary Shares 562,500
Share Premium - Preference Shares 2,137,500

Problem 6-4

GENERAL JOURNAL
Date Page Number 01
2020 Descriptions PR Debit Credit
1-Jan Notes Payable Php 4,000,000
Accrued Interest Payable 320,000
Notes Payable - new Php 3,500,000
Premiums on Notes Payable 124,705
Gain on Extinguishment of Debt 695,295

21/31 Interest Expense 350,000

Cash 350,000

Premiums on Notes Payable 60,024

Interest Expense 60,024
 GENERAL JOURNAL
Date Page Number 01
2021 Descriptions PR Debit Credit
31-Dec Notes Payable - new Php 3,500,000
Interest Expense 350,000
Cash Php 3,850,000

Premiums on Notes Payable 64,681

Interest Expense 64,681

Present Value of Principal Php 3,000,550

Present Value of Interest Payments
624155
Total Present Value of New Liability
Php 3,624,705

Present Value of New Liability Php 3,624,705

Principal Obligations (3500000)
Premiums on Notes Payable Php 124,705

Notes Payable Php 4,000,000

Accrued Interest 320000
Carrying Amount of Old Liability 4320000
Present Value of New Liability (3624705)
Gain on Extinguishment of Debt Php 695,295