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How much is the interest expense for the year

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On August 1, 2020, the Mambo Corp. issued P5,000,000, 8% bonds dated March 1, 2020 and maturing on February 28, 2030 for a total consideration for P4,458,429 which includes accrued interest. The bonds pay interest annually every February 28. The issue price provides
a yield of 10%. The company uses a calendar year.

  • On September 30, 2025, the company decided to retire the bonds for a total payment of P4,600,000 which includes the accrued interest.

Problem 1: How much is the interest expense for the year 2020?

Problem 2: At what amount should the bonds payable be presented on December 31, 2021?

Problem 3: How much is the interest expense for the year 2025?

Problem 4: How much should be recognized as gain (loss) on early retirement of bonds on September 30, 2025?

Reference no: EM132808262

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