In July, 2014, the company paid a total of P120,000 for attorney's fees and other related costs. This was booked as organizational cost and included under other noncurrent assets to be amortized by the company over a period of five (5) years. No amortization has been booked yet as of June 30, 2015.

 

Required: Compute the amortization as of June 30, 2015

 

B. A loan payable in the amount of P1,600,000 was issued on April 1, 2015. This bears interest at 14 1/2%, and is payable in four equal annual payments of P400,000. The first interest and principal payment will be on April 1, 2016. No accrual of interest was made as of June 30, 2015

 

Required: Compute the accrual of interest as of June 30, 2015

 

C. On June 5, 2015, a delivery truck of Riley was involved in an accident with a private car owned by a certain Mr. Greg del Pilar. A case was filed by the owner against the company. On July 25, 2015, the company received a notice of a lawsuit seeking P180,000 in damages. The company's legal counsel believes it is reasonably possible that the company will be required to pay an estimated amount between P90,000 to P150,000.

 

Required: Show the necessary entries for this event.

 

D. On July 1, 2014, the company purchased 12% bonds, having a maturity value of P500,000, for P537,907. The bonds provide the bondholders with a 10% yield. They are dated July 1, 2014, and mature July 1, 2019, with interest receivable June 30 of each year. Per inquiry with the accounting manager, Riley intends to use the effective-interest method to allocate unamortized discount or premium. As of audit date, the company still has not received any interest from the bonds and the company still has not recorded the amortization of discount or premium. The bonds are classified in the at amortized cost category.

 

Required: Compute the amortization as of June 30, 2015

Answer rating: 100% (QA)

A To compute the amortization of organizational cost as of June 30 2015 Organizational cost P120000 ... View the full answer