Reference no: EM132853352

Carl, Inc. issued a P4,000,000, 5 year, 12% bonds on January 1, 2020 for P3,668,156. Carl incurred transaction costs of P80,000. The yield on the net proceeds is computed at 15% . Interest on bonds is payable semi-annually on June 30 and December 31.

On October 31, 2022, Carl retired P1,500,000 face value bonds at 98 plus accrued interest. Remaining bonds were retired on January 1, 2025 Assume the calendar year is the company's reporting period/accounting period. (20%) (8 items @2.5 points each)

Problem 1: What is the amount of interest expense for 2020?

Problem 2: What is the amount of bond discount amortization for 2020?

Problem 3: What is the bond's carrying value at December 31, 2020?

Problem 4: What is the carrying value of the bonds retired at October 31, 2022?

Problem 5: How much is the total cash payment for the retirement of the bonds (inclusive of the bond retirement price and accrued interest)

Problem 6: How much is the gain or loss on early retirement of bonds? Indicate whether gain or (loss)

Problem 7: What is the carrying value of the remaining bonds at December 31, 2022?

Problem 8: What if in the above problem, the entire bonds issue were retired on October 31, 2022, how much is the gain or (loss) on early retirement of the bonds? Indicate whether gain or (loss).