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What amount of loss should Valiant accrue at December

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Reference no: EM132879853

PROBLEM 1 -The following data were obtained from the initial audit of Gatdum Company:

5%, 10-year, Bonds payable, dated January 1, 2019 Debit Credit Balance

Cash proceeds from issue on January 1, 2019 of 1,000, P1,000 bonds. The market rate of interest on the date of issue was 12% 1,172,044 1,172,044

Bond Interest Expense

Cash paid, 1/2/2020 75,000 75,000

Cash paid, 7/1/2020 75,000 150,000

Accrual, 12/31/2020 75,000 225,000

Accrued Interest on Bonds

Balance, 1/1/2020 75,000 75,000

Accrual, 12/31/2020 75,000 150,000

Treasury Bonds Redemption price and interest date on 200 bonds permanently retired on 12/31/2020 P 265,000 P 265,000

Based on the following information, determine the following:

1. Carrying value of bonds payable at December 31, 2020?

2. Loss on Bond Redemption

3. Accrued interest on Bonds at December 31, 2020

4. Bond interest expense for the year ended December 31, 2020

PROBLEM 2 - A truck owned and operated by Valiant Company was involved in an accident with an auto driven by Breww on January 12, 2020. Valiant Company received a notice on April 24, 2020 of a lawsuit for 800,000 damages for a personal injury suffered by Breww. Vaiant'scounsel believes it is reasonably possible that Breww will be successful against the company for an estimated amount in the range between P100,000 and 400,000. No amount within this range is better estimate of potential damages than any other amount. It is expected that the lawsuit will be adjudicated in the latter part of 2021. What amount of loss should Valiant accrue at December 31, 2020?

Reference no: EM132879853

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