MC 11

Purchase price P 1,000,000 Purchase price P 1,000,000

Multiply x 1.04 Accrued Interest x 0.12 x 4/12
Debt investment P 1,040,000 Interest P 40,000

MC 12 MC 13
Purchased Price P 8,750,000 Investment cost, 7/1 P3,692,000
Interest x 5% Nominal Int. (4M x 4%) P160,000
Interest Income P 437,500 Effective Int. (3.692M x 5%) 184,600 (24,600)
Investment CV, 12/31, Yr2 P3,716,600
MC 14
Cost P 3,692,000 MC 15
Effective Int. x 5% Cost P912,400
Interest Income P 184,600 Amort. Disc. (912.4k x 10%) – (1M x 8%) 11,240
Investment CV, 12/31/ yr2 P923,640
MC 16
Proceeds from bonds P7,850,000 MC 17
Accrued Interest (8M x 8% x .5) ( 320,000) CA = FV = P472,500
Selling price P7,530,000
MC 18
Carrying value of bond investment Purchased P500,000
Acquisition cost P7,383,000 Interest x 8% x
6/12
Amort. 12/1,yr1 Interest Income P 20,000
Effective Int. 369,150
Nominal Int. 320,000 49,150 MC 19
CV, 12/1, yr1 P7,432,150 Sales Price P460,000
Amort., 6/1/ yr2 CA of Investment (472,500)
Effective Int. 371,608 Loss on Sale (P12,500)
Nominal Int. 320,000 51,608 (7,483,758)
Gain on Sale P 46,242 MC 21
PV of note P1,594,400
MC 20 Amort. (PV x 6%) (95,664)
Annual Insurance Premium P110,000 CA, 12/31/19 P1,590,064
Increase in CSV (115k – 80k) ( 35,000)
Life insurance expense P 75,000 MC 23
Annual Prem. P40,000
MC 22 Incr. CSV ( 21,000)
CSV, 1/1/19 P100,000 Dividend Received ( 6,000)
Increase in CSV (180-160)k 20,000 Life insurance exp. P13,000
CSV, 12/31/19 P120,000
MC 25
MC 24 FV P5,000,000
BSF, 1/1 P 2,250,000 Future annuity in adv. ÷ 5.11
Add’tl Invest. 450,000 Annual deposit P 978,500
Div. Rev. 75,000
Int. Rev 150,000
Admin. Cost ( 25,000)
BSD, 12/31 P2,900,000