1.
On October 1, 2009, York Company
purchased 4,000 of the P1,000 face value, 10% bonds of Dell Company for
P4,400,00 which includes accrued interest of P100,000. The bonds, which
mature on January 1, 2016, pay interest semiannually on January 1 and
July 1. York uses the straight-line method of amortization and
appropriately recorded the bonds as a long-term investment. The bonds
should be shown on York's December 31, 2009 balance sheet at:
A. 
B. 
C. 
D. 
2.
On October 1, 2008, Pentel Company purchased 6,000 of the
P1,000 face value, 10% bonds of Ophra Company for P6,600,000 including accrued
interest of P150,000. The bonds , which mature on January 1, 2015, pay interest
semiannually on January 1 and July 1. Pentel used the straight line method of
amortization and appropriately recorded the bonds as a long-term investment. On
Pentel’s December 31, 2009 balance sheet, the bonds should be reported at:
A. 
B. 
C. 
D. 
3.
On April 1, 2009, Sailor Company
purchased P2,000,000 face value, 9%, Treasury Notes for P1,985,000,
including accrued interest of P45,000. The notes mature on July 1,
2010, and pay interest semiannually on January 1 and July 1. Sailor
uses the straight line method of amortization. In its October 31, 2009
balance sheet, the carrying amount of this investment should be:
A. 
B. 
C. 
D. 
4.
On July 1, 2009 Hillary Company purchased
as a long-term investment in Esau Company's ten-year 12% bonds, with a
face value of P5,000,000 for P4,760,000. Interest is payable
semi-annually on January 1 and July 1. The bonds mature on July 1,
2013. Hillary uses the straight line method of amortization. What is
the amount of interest income that Hillary should report in its income
statement for the year ended December 31, 2009?
A. 
B. 
C. 
D. 
5.
Comma Company acquired long term 12%
bonds. P2,000,000 face value for P2,192,000 including accrued interest
and brokerage of P92,000 on January 1, 2009. The bonds pay semiannual
interest and mature May 1, 2015. On December 31, 2009, Comma sold all
bonds for P2,300,000 excluding accrued interest. What is the gain on
sale of bonds?
A. 
B. 
C. 
D. 
6.
Jacob Company purchased bonds at a
discount of P100,000. Subsequently, Jacob sold these bonds at a premium
of P140,000. During the period that Jacob held this investment,
amortization of the discount amounted to P20,000. What amount should
Jacob report as gain on the sale of the bonds?
A. 
B. 
C. 
D. 
7.
On July 1, 2009, Cola Company paid
P1,198,000 of 10%, 20-year bonds with a face amount of P1,000,000.
Interest is paid on December 31 and June 30. The bonds were purchased
to yield 8%. Cola uses the effective interest method to recognize
interest income from this investment. What should be reported as the
carrying amount of the bonds in December 31, 2009 balance sheet?
A. 
B. 
C. 
D. 
8.
On July 1, 2009, Easter Company purchased
as a long-term investment P5,000,000 face amount, 8% bonds of Ranch
Company for P4,615,000 to yield 10% per year. The bonds pay interest
semiannually on January 1 and July 1. In its December 31, 2009 balance
sheet Eastern should report interest receivable of:
A. 
B. 
C. 
D. 
9.
On January 1, 2009, Cart Company
purchased Fae Company 9% bonds with a face amount of P4,000,000 for
P3,756,000 to yield 10%. The bonds are dated January 1, 2009, mature on
December 31, 2018, and pay interest annually on December 31. Cart uses
the interest method of amortizing bond discount. In its income
statement for the year ended December 31, 2009, what total amount
should Cart report as interest revenue from the long-term bond
investment?
A. 
B. 
C. 
D. 
10.
On January 1, 2009, Port Company
purchased bonds with face value of P8,000,000 for P7,679,000. The
stated rate on the bonds is 10% but the bonds are acquired to yield
12%. The bonds mature at the rate of P2,000,000 annually every December
31 and the interest is payable annually also every December 31. The
company uses the effective interest method of amortizing discount. Port
Company should report the investment in bonds on December 31, 2009 at:
A. 
B. 
C. 
D. 
11.
On January 1, 2009, Den Company purchased
ten-year bonds with a face value of P1,000,000 and a stated interest
rate of 8% per year payable semiannually July 1 and January 1. The
bonds were acquired to yield 10%. Present value factors are as follows:Present value of 1 for 10 periods at 10% .386Present value of 1 for 20 periods at 5% .377Present value of an annuity of 1 for 10 periods at 10% 6.145Present value of an annuity of 1 for 20 periods at 5% 12.462The purchase price of the bonds is:
A. 
B. 
C. 
D. 
12.
On January 1, 2009 Russo Company
purchased 5-year bonds with face value of P8,000,000 and stated
interest of 10% per year payable semiannually January 1 and July 1. The
bonds were acquired to yield 8%. Present value factors are:Present value of an annuity of 1 for 1 periods at 5% 7.72Present value of an annuity of 1 for 10 periods at 4% 8.11Present value of 1 for 10 periods at 4% 0.6756What is the purchase price of the bonds?
A. 
B. 
C. 
D. 
13.
On January 1, 2009, Tag Company purchased
bonds with face value of P2,000,000. The bonds are dated January 1,
2009 and mature on January 1, 2013. the interest on the bonds is 10%
payable semiannually every June 30 and December 31. The prevailing
market rate of interest on the bonds is 12%. what is the present value
of the bonds on January 1, 2009? Round off present value factor to two
decimal places.
A. 
B. 
C. 
D. 
14.
On January 1, 2009, Riyadh Company
purchased serial bonds with face value of P3,000,000 and stated 12%
interest payable annually every December 31. The bonds mature at an
annual installment of P1,000,000 every December 31. The rounded present
value of 1 at 10% for: One period 0.91 Two periods 0.83 Three periods 0.75What is the market price of the serial bonds on January 1, 2009?
A. 
B. 
C. 
D. 
15.
On January 1, 2009, Cameron Company
purchased bonds with face value of P5,000,000 at a cost of P4,700,000.
The stated interest is 10% payable annually every December 31. The
bonds mature in 4 years or January 1, 2011.How much interest
income should be reported by Cameron Company for the year ended
December 31, 2009 using the effective interest method?
A. 
B. 
C. 
D. 
16.
In January 1, 2009, Camelot Company
established a sinking fund in connection with its issue of bonds due in
2014. A bank was appointed as independent trustee of the fund. On
December 31, 2009, the trustee held P364,000 cash in the sinking fund
account representing P300,000 in annual deposits. How should the
sinking fund be reported in Camelot's balance sheet at December 31,
2009?
A. 
No part of the sinking fund should appear in Cameron's balance sheet
B. 
P64,000 should appear as a current asset
C. 
P364,000 should appear as a current asset
D. 
P364,000 should appear as a noncurrent asset