PRACTICAL APPLICATION 45ITEMS

Problem 1 24items

Kulangs A. Pera Company has starting to have a problem in cash liquidity, because of this the
company decided to issue bonds. First bond has been issued on March 1, 2020 and the Second
bond has been issued on November 31, 2020.

The maturity period of the first bond is 3years, with stated rate of 8% and effective rate of 10%.
Interest is payable semi-annual every September 1 and March 1.

The maturity period of the second bond is 5years, with stated rate of 6% and effective rate of 5%.
Interest is payable annually every December 31.

The face amount of the bonds is P3,000,000 and P5,000,000 for first bond and second bond
respectively.

Based on the problem above compute for the following questions:

PRESENT YOUR SOLUTIONS PROPERLY WITH THE FINAL ANSWER IN A SEPARATE

ANSWER SHEET

WITH CORRECT ANSWER BUT NO SOLUTIONS = NO POINTS

WITH SOLUTIONS BUT NO CORRECT ANSWER = NO POINTS
WITH SOLUTIONS AND CORRECT ANSWER = COMPLETE POINTS

ERASURE WILL BE A 1PT DEDUCTION

1. What is the result of the first bond Premium or Discount? And how much? 2pts
2. What is the result of the second bond Premium or Discount? And how much? 2pts
3. How much is the total interest expense to be recognize on December 31, 2020? 3pts
4. How much is the total interest payments as of December 31, 2020? 2pts
5. How much is the total interest payable as of December 31, 2020? 2pts
6. How much is the total carrying amount of bonds as of December 31, 2020? 3pts
7. How much is the total interest expense to be recognize on December 31, 2021? 3pts
8. How much is the total interest payments as of December 31, 2021? 2pts
9. How much is the total interest payable as of December 31, 2021? 2pts
10. How much is the total carrying amount of bonds as of December 31, 2021? 3pts
Problem 2 21items

On January 1, 2020 Wala ng Ka Pera Pera Company issued two notes payable instead of paying
cash and still love to purchase and purchase.

1. Is issued for the purchase of building for P2,000,000 payable in four equal installment
every beginning of the year starting 2020. Prevailing market rate for this notes payable is
5%.
2. Is issued for the purchase of Super Calculator (just press equal and answer will appear)
for P100,000 with P10,000 down payment payable on January 1, 2020. The balance will
be paid in three equal installment every end of the year starting 2020, the prevailing market
rate for this notes payable is 3%

Based on the problem above compute for the following questions:

PRESENT YOUR SOLUTIONS PROPERLY WITH THE FINAL ANSWER IN A SEPARATE

ANSWER SHEET

WITH CORRECT ANSWER BUT NO SOLUTIONS = NO POINTS

WITH SOLUTIONS BUT NO CORRECT ANSWER = NO POINTS
WITH SOLUTIONS AND CORRECT ANSWER = COMPLETE POINTS

ERASURE WILL BE A 1PT DEDUCTION

1. What is the cost of the Building? 2pts

2. What is the cost of Super Calculator? 2pts
3. How much is the total Cash payment on January 2020? 2pts
4. How much is the total interest expense to be recognize on December 31, 2020? 3pts
5. How much is the total carrying amount of the notes payable as of December 31, 2020?
3pts
6. How much is the total cash payments on 2021 pertaining to principal only? 3pts
7. How much is the total interest expense to be recognized on December 31, 2021? 3pts
8. How much is the total carrying amount of the notes payable as of December 31, 2021?
3pts