Question #1: On January 1, 20x1 an entity issues bonds with face amount of 5,000,000 for 5,773,129. The bonds mature on December 31, 20x3 and pat annual interest of 14%. The effective rate is 8%. On December 31, 20x2 after paying the annual interest, the entity retires the bonds at a call premium of 400,000.

Requirement: What is the entry on the retirement of the bond on December 31,20x2?

Question #2: 13. On march 1 , 2002 Pyne furniture co issued P 700,000 of the 10 percent bonds to yield 8 percent. Interest is payable semiannually on February 28 and August 31. The bonds mature in 10 years. Pyne Furniture Co is a calendar year corporation.

Requirements :

a. What is the issue price of the bonds. How did you compute it?

b. What is the amortization table through the first two interest periods using effective interest method.

c. What are the journal entries to record bond related transaction on March 1, 2002, August 31, 2002, December 31, 2002 and February 28 2003(assume no reversing entries are made)?

Question #3. Use the following information for the next two questions: On january 1 20x1 an entity has oustanding note payable with carrying amount of P 1 200 000.

First Question:. On this date, the debtor agrees to receive equipment with historical cost of 2 000,000, accumulated depreciation of P 900,000 and fair Value of P 1 000,000 in full settlement of the note payable.

Requirements:

a. what is the gain or loss on the derecognition of note payable?

Second Question :. On this day, the debtor agrees to receive 12 000 shares of the entity with par value per share of P20 in full settlement of the note payable. the shares are currently selling at P110 per shares.

Requirements:

a. What is the gain or loss on the derecognition of the note payable?

b. What is the entry to record the decognition of the note payable?