In the course of your examination of the liabilities accounts of Vista Company, you found that...
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In the course of your examination of the liabilities accounts of Vista Company, you found that the entity on January 2, 2017 issued at a premium bonds payable with a face value of P500,000. The premium was erroneously credited by the company to Interest Income. The bonds are payable on December 31, 2024 and pay interest semiannually on June 30 and December 31. You instructed your audit staff to compute the premium amortization using the interest method and he provided you with the ff: Premium amortization from January 2, 2017 to June 30, 2017 - P1,562 Bond carrying value as of June 30, 2017 - P555,738 Total interest paid on bonds for the year 2017 (payments made on June 30 and December 31) - P70,000 1. The annual stated interest rate on the bonds is? 2. The effective annual interest rate on the bonds is? In the course of your examination of the liabilities accounts of Vista Company, you found that the entity on January 2, 2017 issued at a premium bonds payable with a face value of P500,000. The premium was erroneously credited by the company to Interest Income. The bonds are payable on December 31, 2024 and pay interest semiannually on June 30 and December 31. You instructed your audit staff to compute the premium amortization using the interest method and he provided you with the ff: Premium amortization from January 2, 2017 to June 30, 2017 - P1,562 Bond carrying value as of June 30, 2017 - P555,738 Total interest paid on bonds for the year 2017 (payments made on June 30 and December 31) - P70,000 1. The annual stated interest rate on the bonds is? 2. The effective annual interest rate on the bonds is?
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1 To determine the annual stated interest rate on the bonds we need to calculate the interest expens... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-1119048541
11th Canadian edition Volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy
Posted Date:
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