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Determine the gain or loss on sale of the bonds

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Reference no: EM132713132

Question - On January 1, 2019, Hart Corporation purchased 1,000 of ABC 8%, P1,000 callable bonds for P877,068, which represented a 10% effective interest rate. The bonds are dated January 1, 2019, and mature on January 1, 2029. Interest is payable annually on January 1. On January 1, 2020, Hart sold half of the bonds at 101. Assume that Hart uses the effective interest method of amortization and that its fiscal year ends December 31

Instruction - Determine the following:

1. Determine the Interest income for the year ended December 31, 2019.

2. Determine the Carrying value of the bonds as of December 31, 2019.

3. Determine the Interest income for the year ended December 31, 2020.

4. Determine the Carrying value of the bonds as of December 31, 2020.

5. Determine the Gain or loss on sale of the bonds.

6. Give the entry to adjust the allowance for doubtful accounts at December 31, 2020.

Reference no: EM132713132

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