What is the loss that Klein should record

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Q1. Apple Company issues P20,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2017. Interest is paid on June 30 and December 31. The proceeds from the bonds is P19,604,145. Using effective-interest amortization, how much interest expense will be recognized in 2017?

Q2. The 10% bonds payable of Klein Company had a net carrying amount of P570,000 on December 31, 2016. The bonds, which had a face value of P600,000, were issued at a discount to yield 12%. The amortization of the bond discount was recorded under the effective-interest method. Interest was paid on January 1 and July 1 of each year. On July 2, 2017, several years before their maturity, Klein retired the bonds at 102. The interest payment on July 1, 2017 was made as scheduled. What is the loss that Klein should record on the early retirement of the bonds on July 2, 2017? (Ignore taxes.)

Reference no: EM132662567

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