‘The STEPHANY CO. sold P6,000,000 of 9% bonds on October 1, 1999, at P5,747,280 plus accrued interest. The bonds were dated July 1, 1999; interest payable semiannually on January 1 and July 1; redeemable after June 30, 2004 to June 30, 2007, at 101, and thereafter until maturity at 100; and convertible into P10 par value common stock as follows: ‘+ Until June 30, 2004, at the rate of 6 shares for each P1,000 bond. + From July 1, 2004, to June 30, 2007, at the rate of 5 shares for each P1,000 bond, + After June 30, 2007, at the rate of 4 shares for each P1,000 bond. ‘The bonds mature 10 years form their issue date. The company adjust its books monthly and closes its books as of December 31 each year. The following transactions occur in connection with the bonds: 2005 July 1 P2,000,000 of bonds were converted into stock. 2006 Dec 31 P1,000,000 face value of bonds were reacquired at 99-1/4 plus accrued interest. These were immediately retired. 2007 July 1 The remaining bonds were called for redemption and accrued interest was paid. For purposes of obtaining funds for redemption and business expansion, an P8,000,000 issue of 7% bonds was sold at 97. These bonds are dated July 1, 2007, and are due in 20 years. Questions 1. What is the carrying value of bonds payable at December 31, 19997 a. P 5,747,280 b. P6,000,000 c. P.5,753,760 d. P 5,749,440 2. What is the total interest expense for 1999? a. P 128,520 b. P-47,160 c. P 141,480 . P 135,000 3. In recording the bond conversion on July 1, 2005, how much should be credited to the additional paid-in capital account? a. P 1,796,320 b. P1,965,440 cP 1,845,440 6. P 1,865,440 4, What is the gain or loss on bond conversion on July 1, 2005? a. PO b. P1,796,320 c. P 1,865,440 d. P 34,560 5. What is the carrying value of the bonds reacquired on December 31, 2006? a. P 989,200 b. P-957,880 c. P 1,010,800 6. P 981,700 6. What is the gain (loss) on bond reacquisition on December 31, 2006? a. P 3,300 b. (P 3,300) c. 34,620 4. (P 34,620) 7. What is the carrying value of the bonds retired on July 1, 20077 a. P 3,000,000 b. P 2,974,080 cP. 2,873,640 d. P 3,025,920 8. What is the gain (loss) on bond retirement on July 1, 20077 a. (P-25,920) b.-P25,920 ‘c. (P 12,960) a. PO