On November 1, 2018, Mason Company issued P8,000,000 of 10-year, 8% term bonds dated

October 1, 2018. The bonds were sold to yield 10% with total proceeds of P7,000,000 plus
accrued interest. Interest is paid every April 1 and October 1.
What amount should be reported as accrued interest payable on December 31, 2018?
Answer: 160,000

On July 1, 2018, Tara Company issued 4,000 of 8%, P1,000 face value bonds payable for
P3,504,000. The bonds were issued to yield 10%.
The bonds are dated July 1, 2018 and mature on July 1, 2028. Interest is payable
semiannually on January 1 and July 1.
Using the effective interest method, what amount of the bond discount should be
amortized for the six months ended December 31, 2018?
Ans: 15,200

On January 31, 2018, Beau Company issued P3,000,000 maturity value, 12% bonds for
P3,000,000 cash. The bonds are dated December 31, 2017 and mature on December 31,
2027. Interest is payable semiannually on June 30 and December 31.
What amount of accrued interest payable should be reported on September 30, 2018?
Ans: 90,000

Recording estimated warranty expense in the current year best follows which accounting
principle?

Ans: Matching

On January 1, 2018, Carrow Company issued 10% bonds in the face amount of P1,000,000
that mature on January 1, 2028.
The bonds were issued for P886,000 to yield 12%, resulting in bond discount of P114,000.
The entity used the interest method of amortizing bond discount. Interest is payable on
January 1 and July 1.
For the year ended December 31, 2018, what amount should be reported as bond interest
expense?
Ans: 106,510

An entity receives an advance payment for special order goods that are to be manufactured
and delivered within 6 months. The advance payment shall be reported in the entity’s
balance sheet as

Ans: Current Liability

Statement 1: The discount on bonds payable and the premium on bonds payable shall be
considered separate from the bonds payable account.
Statement 2: Both accounts shall be treated inconsistently as valuation accounts of the bond
liability.
Ans:
Both statements are False
Any contract that gives rise to a financial asset of one entity and a financial liability or equity
instrument of another entity

Ans: Financial Instrument

Aye Company is authorized to issue P5,000,000 of 6%, 10-year bonds dated July 1, 2018
with interest payments on June 30 and December 31. When the bonds are issued on
November, 1, 2018, the entity received cash of P5,150,000 including accrued interest.
What is the discount or premium on bonds payable?
Ans: 50,000 bond premium
On April 1, 2018, Greg Company issued at 99 plus accrued interest, 2,000 of 8% P1,000 face
value bonds. The bonds are dated January 1, 2018, mature on January 1, 2028, and pay
interest on January 1 and July 1. The entity paid bond issue cost of P70,000.
From the bond issuance, what is the net cash received?
Ans: 1,950,000