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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
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%