Pasado Company provided the following transactions related to a sinking fund for retirement of

bonds payable:
a. In accordance with the terms of the bond indenture, cash in the amount of P3,450,000 is transferred at the end of the
first year, from the regular cash account to the sinking fund. The entity administers the fund.
b. The sinking fund cash is used to acquire AB Company 12% bonds of P670,000 face value, maturing in five years, for
P520,000.
c. The sinking fund cash is used to acquire 10% P100 par value CD 4,000 preference shares, at P60 per share.
d. Annual interest is received on the AB bonds. The discount on the bonds is amortized accordingly using straight line
method.
e. Sinking fund expenses of P47,500 are paid from the sinking fund cash.
f. The sinking fund cash is used to acquire EF Company 10% bonds of P600,000 face value, maturing in four years for
P500,000 plus accrued interest of P15,000.
g. Annual dividends are received on the CD preference share.
h. Interest is received on the EF bonds, P30,000, including the accrued interest at the time of purchase.
i. All EF bonds are sold for P550,000. No interest is accrued at the time of sale.
j. Retained earnings are appropriated in an amount equal to the sinking fund balance.
Provide the relevant journal entries on the given problem. 0.50pts each
Compute the retained earnings appropriated for Sinking Fund. 2pts
s transferred at the end of the

, maturing in five years, for

, at P60 per share.

cordingly using straight line

maturing in four years for

of purchase.
 Problem 1
An entity insured the life of the president for P3500000 the entity being the beneficiary of an ordinary life policy. The
The policy was dated January 1, 2021 and carried the following cash surrender value:
The entity used the calendar year as the fiscal period.
The president died on April 29, 2025 and the policy was collected on June 03, 2025.

End of the policy year Cash Surrender Value

2021 -
2022 -
2023 55000
2024 75000
2025 95000

Requirement: What is the Gain on Life Insurance Settlement? 2pts.

Slovenia Company insured the life of its president for P2,000,000, the entity being the beneficiary of an
ordinary life insurance policy. The annual premium is P80,000 and the policy is dated January 1, 2011.
The cash surrender values are PI5,000 on December 31, 2013 and P19,000 on December 31, 2014. The
entity follows the calendar year as the fiscal period. The president died on October 1, 2014 and the
policy is settled on December 31, 2014.
Required:
What is the gain on life insurance settlement?
What is the life insurance expense for 2014?
1
rdinary life policy. The annual premium is P55,000

, 2014. The