On January 1, 2019, Hart Corporation purchased 1,000 of ABC 8%, P1,000 callable bonds for P877,068, which
Question:
On January 1, 2019, Hart Corporation purchased 1,000 of ABC 8%, P1,000 callable bonds for P877,068, which represented a 10% effective interest rate. The bonds are dated January 1, 2019, and mature on January 1, 2029. Interest is payable annually on January 1. On January 1, 2020, Hart sold half of the bonds at 101. Assume that Hart uses the effective interest method of amortization and that its fiscal year ends December 31 Instruction: Determine the following:
1. Interest income for the year ended December 31, 2019
2. Carrying value of the bonds as of December 31, 2019
3. Interest income for the year ended December 31, 2020
4. Carrying value of the bonds as of December 31, 2020
5. Gain or loss on sale of the bonds.
6. Give the entry to adjust the allowance for doubtful accounts at December 31, 2020.
Expert Answer:
Answer FV Bond Face Value10001000 1000000 PV Bond Purchase 877068 FVPV Bond Discount 1000000877068 1... View the full answer
