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1.

Jell Companys December 31, 2015 balance sheet contained the following
items in the long-term liabilities section:
9 % registered debentures, callable in 2026, due in 2031
9 % collateral trust bonds, convertible into ordinary shares
beginning in 2024, due in 2034
10% subordinate debentures (P30,000 maturing annually
beginning in 2021

700,000
600,000
300,000

What is the total amount of Jells term bonds?


Ans.
2. Jayboy Corporations December 21, 2015 balance sheet contained the
following items in the long term liabilities section:
Unsecured
9.375% registered bonds (P25,000 maturing annually beginning in 2019)
P275,000
11.5% convertible bonds, callable beginning in 2024, due 2025
125,000
Secured
9.875% guaranty security bonds, due in 2025
250,000
10.0% commodity backed bonds (P50,000 maturing annually beginning
In 2020)
200,000
What are the total amounts of serial bonds and debenture bonds?
Ans.
3. On May, 2009, Madiha Company issued 11% bonds in the face amount of
P1,000,000 that mature on May 1, 2019. The bonds were issued to yield 10%
resulting in bond premium of P62,000. Madiha uses the effective interest
interest method of amortizing bond premium. Interest is payable
semiannually on November 1 and May. In its October 31, 2009 balance sheet,
what amount should Madiha report as unamortized bond premium?
Ans.
4. On December 31, 2015, Cindy Corporation issued P200,000, 8% serial bonds
to be repaid in the amount of P40,000 each year. Interest is payable annually
on December 31. The bonds were issued to yield 10% a year. The bond
proceeds were P190,280 based on the present values at December 31, 2015,
of the five annual payments as follows:
DUE DATE
12/31/15
12/31/16
12/31/17
12/31/18
12/31/19

AMOUNTS DUE
PRINCIPAL
INTEREST
40,000
16,000
40,000
12,800
40,000
9,600
40,000
6,400
40,000
3,200

PRESENT VALUES
AT 12/31/15
50,900
43,610
37,250
31,690
26,830

Cindy amortizes the bond discount by the effective interest method. In its
December 31, 2016 balance sheet, at what amount should Cindy report the
carrying value of the bonds?
Ans.
5. The following information pertains to Wahu Companys issuance of bonds on
July 1, 2015:
Face amount
Terms
Stated interest rate
Interest payment dates
Yield

P800,000
10 years
6%
Annually on July 1
9%

What should be the issue price for each P1,000 bond?


Ans.
6. On July 1, 2015, after recording interest and amortization, Marianne Company
converted P1,000,000 of its 12% convertible bonds into 50,000 shares of P1
par value ordinary share. On the conversion date the carrying amount of the
bonds was P1,300,000, the fair value of the bonds was P1,400,000 and
Mariannes ordinary share was publicly trading at P30 per share. What
amount of share premium should Marianne record as a result of the
conversion?
Ans.
7. On June 30, 2015, Raoul Company had outstanding 9%, P5,000,000 face
value bonds maturing on June 30, 2020. Interest was payable semiannually
every June 30 and December 31. On June 30, 2015, after amortization was
recorded for the period, the unamortized bond premium and bond issue costs
were P30,000 and P50,000, respectively. On that date, Raoul acquired all its
outstanding bonds on the open market at 98 and retired them. At June 30,
2015, what amount should Raoul recognize as gain on redemption of bonds?
Ans.
8. On July 31, 2015, Edmark Company issued P1,000,000 of 10%, 15-year bonds
at par and used a portion of the proceeds to call its 600 outstanding 11%,
P1,000 face value bonds, due on July 31, 2025, at 102. On that date,
unamortized bond premium relating to the 11% bond was P65,000. In its
2015 income statement, what amount should Edmark report as gain or loss,
before income taxes, from retirement of bonds?
Ans.