REQUIRED:

1 Present Value of Principal ₱3,120,000

Add: Present Value of Annual Interest Payments 2,469,600
Total Present Value of Bonds Payable ₱5,589,600

Bonds Payable ₱6,000,000

Less: Total Present Value of Bonds Payable -5,589,600
Discount on Bonds Payable ₱410,400

2 Issue Price of Bonds with Warrants ₱6,180,000

Less: Total Present Value of Bonds Payable -5,589,600
Residual Amount Allocated to Warrants - Equity Compon ₱590,400

3 Face Amount Bonds Payable ₱6,000,000

Divide: Price per Bond 1,000
Total 6,000
Multiply: Share Warrants 30
Price per Equity Share 50
Cash ₱9,000,000

Issue Price of Bonds with Warrants ₱6,180,000

Less: Total Present Value of Bonds Payable -5,589,600
Share Warrants Outstanding ₱590,400

Face Amount Bonds Payable ₱6,000,000

Divide: Price per Bond 1,000
Total 6,000
Multiply: Share Warrants 30
Par Value 26
Share Capital ₱4,680,000

Cash ₱9,000,000
Less: Share Capital -4,680,000
Total 4,320,000
Add: Share Warrants Outstanding 590,400
Share Premium ₱4,910,400

JOURNAL ENTRY
Cash 9,000,000
Share Warrants Outstanding 590,400
Share Capital
Share Premium
4,680,000
4,910,400
REQUIRED:
1 Bonds Payable ₱4,000,000
Less: Discount on Bonds Payable -500,000
Carrying Amount of Bonds Payable ₱3,500,000

2 Bonds Payable ₱4,000,000

Multiply: Quoted Price of Bonds Payable Without Conversion Privi 95%
Fair Value of Bonds Without Conversion Privilege ₱3,800,000

Bonds Payable ₱4,000,000

Less: Discount on Bonds Payable -500,000
Carrying Amount of Bonds Payable 3,500,000
Less: Fair Value of Bonds Without Conversion Privilege -3,800,000
Loss on Extinguishment of Bonds Payable -₱300,000

3 Payment of Bonds Payable - Dec. 31, 2022 ₱4,200,000

Less: Fair Value of Bonds Without Conversion Privilege -3,800,000
Equity Component ₱400,000

Bonds Payable ₱4,000,000

Add: Equity Component 400,000
Total Payment to Bondholders ₱4,400,000
REQUIRED:
1 Annual Installment ₱600,000
Multiply: Present Value of Ordinary Annui 3.60
Present Value of Note Payable ₱2,160,000

2 Present Value of Note Payable ₱2,160,000

Multiply: Prevailing Interest Rate 12%
Interest Expense - 1st year ₱259,200
REQUIRED:
1 Note Payable ₱1,000,000
Multiply: PV factor 10%, 3 periods 0.751
Carrying Amount of Note Payable - Jan. 1, 2021 ₱751,000

2 Note Payable ₱1,000,000

Multiply: PV factor 9%, 2 periods 0.842
Carrying Amount of Note Payable - Dec. 31, 2021 ₱842,000

3 Note Payable ₱1,000,000

Less: Fair Value or Carrying Amount - Dec. 31, 2021 -842,000
Net Gain from Change in Fair Value of Note Payable - 2 ₱158,000
REQUIRED:
1 Note Payable - old ₱5,000,000
Add: Accrued Interest Rate - old 500,000
Carrying Amount of Old Liability ₱5,500,000

New Principal Obligation ₱4,000,000

Multiply: PV of 1 0.75
PV of Principal ₱3,000,000

New Principal Obligation ₱4,000,000

Multiply: New Interest Rate 8%
New Annual Interest Payment ₱320,000

New Annual Interest Payment ₱320,000

Multiply: PV of Ordinary Annuity 2.49
PV of Interest Payments ₱796,800

PV of Principal ₱3,000,000
Add: PV of Interest Payments 796,800
Present Value of New Note Payable ₱3,796,800

Carrying Amount of Old Liability ₱5,500,000

Less: Present Value of New Note Payabl -3,796,800
Gain on Extinguishment - 2021 ₱1,703,200

2 Present Value of New Note Payable ₱3,796,800

Multiply: Old Interest Rate 10%
Interest Expense - 2022 ₱379,680