Covid19 Company decided to issue 5,000, 8%, 5-year bonds, P1,000 face value each with warrants to acquire 4 shares of P 25 par value share capital at P 30 per share on January 1, 2020. The interest of the bonds is payable annually every December 31. It was determined that without the warrants the bond can be sold at 114.7 with a 6% effective yield, while the bonds with the warrants are sold at 120. All warrants are exercised at the end of the year of issue.

 

1. The value of the Share warrants at the date of issue is        735,000     265,000       470,000          480,000

2. The value of the bonds at the date of issuance is        5,265,000           6,000,000         5,735,000             5,000,000

3. The interest expense in 2020 is        55,900            400,000          344,100       455,900

4. The bonds payable balance at December 31, 2020 is        5,679,100           5,735,000             5,790,900         5,000,000

5. The balance of Share Premium at the exercise of the warrants is        265,000          100,000            165,000         365,000