Reference no: EM133124272

Question 1 - On July 1, 20x5, Pensatucky Trading received P1,032,880 for P1,000,000 face amount 12% bonds, a price that yields 10%. Interest expense for the six months ended December 31, 20x5 should be

a. 61,973

b. 60,000

c. 51,644

d. 50,000

Question 2 - The following data were obtained from the financial records of Orphan

Black Company:

15%, 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, 1/2/20 75,000 75,000

Cash paid, 7/1/20 75,000 150,000

Accrual, 12/31/20 75,000 225,000

Accrued Interest on Bonds

Balance, 1/1/20 75,000 75,000

Accrual, 12/31/20 75,000 150,000

Treasury Bonds

Redemption price and interest to date on 200 bonds permanently retired on December 31, 2020 265,000 265,000

1. What is the carrying value of bonds payable at December 31, 2020?

a. 831,110

b. 800,000

c. 1,151,583

d. 921,266

2. What is the accrued interest on bonds at December 31, 2020?

a. 75,000

b. 135,000

c. 60,000

d. 52,500

3. How much is the bond interest expense for the year ended December 31, 2020?

a. 150,000

b. 139,174

c. 69,745

d. 160,826