PROBLEM 19-8 : COMPLEX COMPANY

Date Bond Outstanding

10/01/2021 - 02/01/2022 1,000,000.00
02/01/2022 - 02/01/2023 2,000,000.00
02/01/2023 - 02/01/2024 1,000,000.00
4,000,000.00

Note:

Bond Outstanding:
To get 1,000,000, Oct 1 to January 31 = 3,000,000 * 4 / 12 = 1,000,000
To get 2,000,000, Feb 1, 2022 to Feb. 1, 2023, Complete year, 3,000,000 - 1,000,000 = 2,000,000
To get 1,000,000 - (amount na binabayaran every year) from 02/01/23 to 02/01/24

Fraction:
1/2 or 2/4

Amortization: (3,000,000 - 2,700,000 = 300,000)

300,000 * 1/4 = 75,000 75,000
300,000 * 1/2 or 2/4 = 150,000 150,000
300,000 * 1/4 = 75,000 75,000
300,000
 J.E.

Fraction Amortization 2021

1/4 75,000.00
1/2 150,000.00 Oct. 1 Investment in Bonds
1/4 75,000.00 Annual Interest Income (3,000,000 * 2
300,000.00 Cash
To record cost of bond investment
Dec. 31 Accrued Interest Income
Interest Income (3,000,000*12%*3
To record adjustment for accrued inte
Dec. 31 Investment in Bonds
Interest Income (75,000/4*3)
3,000,000 - 1,000,000 = 2,000,000 To record amortization of bond discou
02/01/23 to 02/01/24 2022

Jan. 1 Interest Income

Accrued Interest Income
Reversal of the adjustement for accru
Feb. 1 Cash
Interest Income (3000000*12%*6/12
To record the received semiannual in
Cash
Investment in Bonds
To record the bonds redeemed by th
Aug. 1 Cash
Interest Income (2,000,000*.12*6/1
To record the received semiannual i
Dec. 31 Accrued Interest Receivable
Interest Income (2,000,000*.12*5/1
Adjustment for the accrued interest f
Investment in Bonds
Investment Income
To record the total amortization for th

From October 1, 2021 to February 1, 2

From February 1, 2022 to February 1,
Total Amortization
 Dr

Investment in Bonds 2,700,000

Annual Interest Income (3,000,000 * 2 / 12) 60,000
Cash
To record cost of bond investment
Accrued Interest Income 90,000
Interest Income (3,000,000*12%*3/12)
To record adjustment for accrued interest for 3months
Investment in Bonds 56,250
Interest Income (75,000/4*3)
To record amortization of bond discount

Interest Income 90,000

Accrued Interest Income
Reversal of the adjustement for accrued interest on Dec. 31, 2021
Cash 180,000
Interest Income (3000000*12%*6/12)
To record the received semiannual interest
Cash 1,000,000
Investment in Bonds
To record the bonds redeemed by the issuing entity
Cash 120,000
Interest Income (2,000,000*.12*6/12)
To record the received semiannual interest
Accrued Interest Receivable 100,000
Interest Income (2,000,000*.12*5/12)
Adjustment for the accrued interest for 5months
Investment in Bonds 156,250
Investment Income
To record the total amortization for the year 2022

From October 1, 2021 to February 1, 2022 (75,000/4= 18,750)

From February 1, 2022 to February 1, 2023 (150,000*11/12= 137,500)
Total Amortization
 Cr

2,760,000

90,000

56,250

90,000

180,000

1,000,000

120,000

100,000

156,250

18,750
137,500
156,250
PROBLEM 20-2: DEMEANOR COMPANY

Date Interest Received Interest Income Discount Amortization

1/1/2021
12/31/2021 300,000 379,360 79,360
12/31/22 300,000 385,709 85,709
12/31/23 300,000 392,931 92,931

PROBLEM 20-10: IMPASSE COMPANY

PV of Principal (4,000,000 * .567) 2,268,000

PV of Semiannual Interest (640,000*3.605) 2,307,200
Market Price of the Bonds 4,575,200

Date Interest Received Interest Income Premium Amortization

1/1/2021
12/31/2021 640,000 549,024 90,976
12/31/2022 640,000 538,107 101,893

Interest Received
4,000,000*16% = 640,000

PROBLEM 20-12: LABYRINTH COMPANY

Principal Due on December 31, 2021 1,000,000

Interest Received- 12/31/2021 (3,000,000*12%) 360,000
Total Cash Flows on December 31, 2021 1,360,000
Principal due on December 31, 2022 1,000,000
Interest Received - 12/31/2022 (2,000,000*12%) 240,000
Total Cash Flows on December 31, 2022 1,240,000

Principal due on December 31, 2023 1,000,000

Interest Received - 12/31/2023 (1,000,000*12%) 120,000
Total Cash Flows on December 31, 2023 1,120,000

December 31, 2021 (1,360,000*0.91) 1,237,600

December 31, 2022 (1,240,000*0.83) 1,029,200
December 31, 2023 (1,120,000*0.75) 840,000
Market Price of Serial Bonds 3,106,800
 J.E.

Carrying Amount 2021

4,742,000 Jan.1 Investment in Bonds
4,821,360 Cash
4,907,069 Acquisition of the bonds
5,000,000 Dec. 31 Cash
Interest Income (5,000,000*6%)
To record the annual interest received
Dec. 31 Investment in Bonds
Interest Income
Amortization of discount on December 31, 2021
2022
Dec. 31 Cash
Interest Income
Annual Interest Received
Dec. 31 Investment in Bonds
Interest Income
To record amortization of discount
Dec. 31 Cash (5,000,000*110%)
Investment in Bonds
Gain on Sale of Bond
To record gain on sale of bond

J.E

Investment in Bonds
Cash
Acquisition of Bonds
Carrying Amount Cash
4,575,200 Interest Income
4,484,224 To record semiannual interest received
4,382,331 Interest in Bonds
Interest Income
Amortization of discount for 11 months

J.E

2021
Jan. 1 Investment in Bonds
Cash
 Acquisition of Bonds
Dec. 31 Cash
Interest Income
Annual Interest Received
Dec.31 Interest Income
Investment in Bonds
Adjustment for the amortization of premium
Dec. 31 Cash
Investment in Bonds
Full collection of face amount
 DR. CR.

Investment in Bonds 4,742,000

Cash 4,742,000
Acquisition of the bonds
Cash 300,000
Interest Income (5,000,000*6%) 300,000
To record the annual interest received
Investment in Bonds 79,360
Interest Income 79,360
Amortization of discount on December 31, 2021

Cash 300,000
Interest Income 300,000
Annual Interest Received
Investment in Bonds 85,709
Interest Income 85,709
To record amortization of discount
Cash (5,000,000*110%) 5,500,000
Investment in Bonds 4,907,069
Gain on Sale of Bond 592,931
To record gain on sale of bond
Sale Price 5,500,000
Carrying Amount - 12/31/2022 4,907,069
Gain on Sale of Bond Investment 592,931

DR. CR.

Investment in Bonds 4,575,200

Cash 4,575,000
Acquisition of Bonds
Cash 640,000
Interest Income 640,000
To record semiannual interest received
Interest in Bonds 90,976
Interest Income 90,976
Amortization of discount for 11 months

DR. CR.

Investment in Bonds 3,106,800

Cash 3,106,800
 Acquisition of Bonds
Cash 360,000
Interest Income 360,000
Annual Interest Received
Interest Income 49,320
Investment in Bonds 49,320
Adjustment for the amortization of premium
Cash 1,000,000
Investment in Bonds 1,000,000
Full collection of face amount

Interest Received 360,000

Interest Income (3,106,800*10%) 310,680
Premium Amortization 49,320

Acquisition Cost - 01/01/2021 3,106,800

Premium Amortization - 2021 (49,320)
Annual Installment (1,000,000)
Carrying Amount of Bond Investment -12/31/2021 2,057,480
PROBLEM 21-2: MYOPIC COMPANY

Date Interest Received Interest Income Discount Amortization

1/1/2021
12/31/2021 160,000 190,000 30,000
12/31/2022 160,000 193,000 33,000
12/31/2023 160,000 197,000 37,000

Fair Value (2,000,000*110%) 2,200,000

Carrying Amount - December 31, 2021 (1,930,000)
Unrealized Gain - OCI 270,000

Fair Value (2,000,000*120%) 2,400,000

Carrying Amount - December 31, 2022 (1,963,000)
Cumulative Unrealized Gain 437,000

PROBLEM 21-5: ZETA COMPANY

Interest Income for 2021 (4,335,000*6%) 260,100

Carrying Amount - January 1, 2021 4,335,000

Premium Amortization:
Interest Received (4,000,000*8%) (320,000)
Interest Income 260,100
Carrying Amount - December 31, 2021 4,275,100

Unrealized Loss - OCI for 2021

Fair Value - December 31, 2021 3,870,000

Carrying Amount - December 31, 2021 (4,275,100)
Unrealized Loss - OCI for 2021 (405,100)

Interest Income for 2022 (4,000,000*8%) 320,000

Fair Value - December 31, 2022 3,615,000
Carrying Amount - December 31, 2021 (3,870,000)
Unrealized loss in 2022 included in Profit or Loss (255,000)
Reclassified from OCI to Profit or Loss (405,100)
Total Amount included in Profit or Loss in 2022 (660,100)
 J.E.
2021 Investment in Bonds
Carrying Amount Jan. 1 Cash
1,900,000 To record acquisition of bonds
1,930,000 Dec. 31 Interest Income
1,963,000 Cash
2,000,000 To record acquired annual interest
Dec. 31 Investment in Bonds
Interest Income
To record amortized discount

2022
Jan. 1 Financial Asset - FVOCI
Investment in Bonds
To record reclassification on December 31,2021
Jan. 1 Financial Asset - FVOCI
Unrealized Gain - OCI
To record unrealized gain
Dec. 31 Cash
Interest Income
To record acquired annual interest
Dec. 31 Financial Asset - FVOCI
Interest Income
To record amortized discount
Dec. 31 Financial Asset - FVOCI
Unrealized Gain - OCI (437,000-270,000)
To record unrealized gain

J.E
2021
Jan. 1 Financial Asset - FVOCI
Cash
To record purchased bonds
Dec. 31 Cash
Interest Income
To record acquired Interest
Dec. 31 Interest Income (320,000-260,100)
Financial Asset - FVOCI
To record premium amortization
Dec. 31 Unrealized Gain
Financial Asset - FVOCI
To record unrealized gain

2022
Jan. 1 Financial Asset - FVPL
Financial Asset - FVOCI
 To Record the reclassification on December 31, 2021
Dec. 31 Unrealized Loss - PL
Financial Asset - FVPL
To record unrealized loss in 2022 included in Profit or Loss
Dec.31 Unrealized Loss - PL
Unrealized Loss - OCI
To reclassify the amount of OCI to profit or loss
Dec. 31 Cash
Interest Income
To record annual interest received
 DR.
Investment in Bonds 1,900,000
Cash
To record acquisition of bonds
Interest Income 160,000
Cash
To record acquired annual interest
Investment in Bonds 30,050
Interest Income
To record amortized discount

Financial Asset - FVOCI 1,930,000

Investment in Bonds
To record reclassification on December 31,2021
Financial Asset - FVOCI 270,000
Unrealized Gain - OCI
To record unrealized gain
Cash 160,000
Interest Income
To record acquired annual interest
Financial Asset - FVOCI 30,000
Interest Income
To record amortized discount
Financial Asset - FVOCI 167,000
Unrealized Gain - OCI (437,000-270,000)
To record unrealized gain

DR.

Financial Asset - FVOCI 4,335,000

Cash
To record purchased bonds
Cash 320,000
Interest Income
To record acquired Interest
Interest Income (320,000-260,100) 59,900
Financial Asset - FVOCI
To record premium amortization
Unrealized Gain 405,100
Financial Asset - FVOCI
To record unrealized gain

Financial Asset - FVPL 3,870,000

Financial Asset - FVOCI
 To Record the reclassification on December 31, 2021
Unrealized Loss - PL 255,000
Financial Asset - FVPL
To record unrealized loss in 2022 included in Profit or Loss
Unrealized Loss - PL 405,100
Unrealized Loss - OCI
To reclassify the amount of OCI to profit or loss
Cash 320,000
Interest Income
To record annual interest received
 CR.

1,900,000

160,000

30,050

1,930,000

270,000

160,000

30,000

167,000

CR.

4,335,000

320,000

59,900

405,100

3,870,000
255,000

405,100

320,000
PROBLEM 22-9: WEE COMPANY

Requirement 1
Purchase Price (200,000,000 * 9/10)
Nonrefundable Transfer Taxes (20,000,000*9/10)
Legal Cost (1,000,000*9/10)
Initial Cost of Investment Property

Requirement 2
Purchase Price (200,000,000*1/10*20%)
Nonrefundable Transfer Taxes(20,000,000*1/10*20%)
Legal Cost (1,000,000*1/10*20%)
Initial Cost of Land

Requirement 3
Purchase Price (200,000,000*1/10*80%)
Nonrefundable Transfer Taxes(20,000,000*1/10*80%)
Legal Cost (1,000,000*1/10*80%)
Initial Cost of Building

Requirement 4
Fair Value - December 31, 2021 (25,000,000*9)
Carrying Amount
Gain from increase in Fair Value

Requirement 5
Depreciation of the building for the current year
(17,680,000/50)

PROBLEM 22-12: IMPARTIAL COMPANY

Journal Entries
2022
Jan. 1 Life Insurance
Cash
Payment of Insurance Premium

2023
Jan. 1 Life Insurance
Cash
Payment of Insurance Premium

Dec. 31 Cash
Life Insurance
To record the dividends acquired on the life policy

Cash Surrender Value

 Life Insurance Expense (42,000*1/3)
Retained Earnings
Initial Recognition of the Cash Surrender Value

2024
Jan. 1 Life Insurance
Cash
Payment of Insurance Premium

Dec. 31 Cash
Life Insurance
To record the dividends acquired on the life policy

Cash Surrender Value

Life Insurance Expense
Recognition of Increase in Cash Surrender Value

Balance, December 31, 2024

Balance, December 31, 2023
Increase in Cash Surrender Value for 2024
 180,000,000
18,000,000
900,000
198,900,000 A.

4,000,000
400,000
20,000
4,420,000 B.

16,000,000
1,600,000
80,000
17,680,000 C.

225,000,000
198,900,000
26,100,000 D.

353,600 A.

DR. CR.

80,000
80,000

80,000
80,000

5,000
5,000

42,000
 14,000
28,000

80,000
80,000

6,000
6,000

5,000
5,000

47,000
42,000
5,000
PROBLEM 23-4: ANSON COMPANY

Journal Entries
1 Machinery
Accounts Payable
Acquisition of Machinery

Accounts Payable
Purchase Discount Lost (3,000,000*10%)
Cash
Machinery
To record the payment beyond the discount period

Loss on Retirement of Old Machine

Spare Parts Inventory
Cash
To record the installation payment

2 Machinery
Interest Expense
Cash
Notes Payable
To record acquisition of installment

Note Payable
Cash
To record the first installment payment

3 Machinery (500,000 * 3.17)

Discount on Note Payable
Note Payable
Acquisition of the machinery

Note Payable
Cash
Installment payment at the end of the current year

Interest Expense (1,585,000*10%)

Discount on Note Payable
To amortize the Discount on Note Payable

4 Machinery (2,000,000*0.68)
Discount on Note Payable
Note Payable
Acquisition of the machinery

Interest Expense (10%*1,360,000)

Discount on Note Payable
 Discount Amortization on Note Payable

PROBLEM 23-10: GRATITUDE COMPANY

Direct Labor
Materials: Finished Goods
Overhead (2,000,000*4,200,000/6,000,000)
Total Cost of Finished Goods

Direct Labor
Materials: Building
Overhead (2,000,000*1,800,000/6,000,000)
Total Cost of Building
3,000,000
3,000,000

3,000,000
300,000
3,000,000
30,000

50,000
150,000
200,000

4,700,000
800,000
500,000
5,000,000

5,000,000
5,000,000

1,585,000
415,000
2,000,000

500,000
500,000

158,500
158,500

1,360,000
640,000
2,000,000

136,000
136,000
4,200,000
3,000,000
1,400,000
8,600,000

1,800,000
4,000,000
600,000
6,400,000
S