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How much should abc co report as interest income

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Reference no: EM132864599

Problem 1: The balance of cash surrender value of life insurance policy on the books of ABC Co. increased from P80,000 to P115,000 during 2020. If the company pays annual insurance premium of P110,000 on this policy, how much is the life insurance expense for 2020?

a. P75,000
b. P80,000
c. P110,000
d. P145,000
e. none of the choices

Problem 2: On January 1, 2020, ABC Co. purchased 4,000 of P1,000 face value, 10% bonds of XYZ Co. for P4,270,600. The bonds will mature on January 1, 2024 pay interest semi-annually on January 1 and July 1. Bonds effective interest rate is 8%. In its December 31, 2020 income statement, how much should ABC Co. report as interest income on the bonds?

a. P160,000
b. P169,657
c. P170,824
d. P340,481

Reference no: EM132864599

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