How much gain on the settlement of debt is to be recognized

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Q1) The balance in Julia Company accounts payable account at December 31, 2020 was P3,550,000 before any necessary year-end adjustments relating to the following:

Goods were in transit to Julia from a vendor on December 31, 2020. The invoice cost was P150,000. The goods were shipped FOB shipping point on December 29, 2020 and were received on January 2, 2021.

Goods shipped FOB destination on December 21, 2020; from a vendor to Julia, were received on January 6, 2021. The invoice cost was P96,000

On December 27, 2020, Julia wrote and recorded checks totaling P180,000 which were mailed on January 10, 2021.

In Julia's December 31, 2020 statement of financial position, how much should be the accounts payable?

a. P3,976,000

b. P3,880,000

c. P3,796,000

d. P3,700,000

Q2) Even Company issues P10,000,000, 6%, 5-year bonds dated January 1, 2020 on January 1, 2020. The bonds pay interest semiannually on June 30 and December 31. The bonds are issued to yield 5%. What are the proceeds from the bond issue?

a. P10,000

b. P10,432,988

c. P10,437,618

d. P10,434,616

Q3) The 12% bonds payable of Yesman Co. had a carrying amount of 832,000 on December 31, 2019. The bonds, which had a face value of P800,000, were issued at a premium to yield 10%. Yesman uses the effective-interest method of amortization. Interest is paid on June 30 and December 31. On June 30, 2020, several years before their maturity, Yesman retired the bonds at 104 plus accrued interest. The loss on retirement, ignoring taxes, is

a. P0

b. P6,400.

c. P9,920.

d. P32,000

Q4) On December 31, 2020, Nike Company is in financial difficulty and cannot pay a note due that day. It is a P600,000 note with P60,000 accrued interest payable to Pipe, Inc. Pipe agrees to accept from Nike a building that has a fair value of P590,000, an original cost of P530,000, and accumulated depreciation of P130,000. How much gain on the settlement of debt is to be recognized by Nike?

a. P0

b. P10,000

c. P60,000

d. P70,000

Q5) Using the information in number 4, how much is the gain (loss) on the disposal of the building?

Reference no: EM133024794

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