Reference no: EM132842565
Question - On January 1, 2021, Wonder Co. issued P20,000,000, 9%, 10-year bonds for P16,609,866.18. The bonds were issued at an effective interest rate of 12%. Interest is paid every December 31.
On December 31, 2022, after the payment of the annual interest, Wonder reacquired and retired bonds that have a face value of P4,000,000 at 88.
On April 1, 2024, Wonder reacquired and retired bonds that have a face value of P6,000,000 at 86 plus accrued interest.
Required -
1. Prepare the journal entry to record the retirement of the bonds on December 31, 2022.
2. Determine the carrying amount of the remaining bonds on December 31, 2022.
3. How much is the carrying amount of the bonds on December 31, 2023?
4. Prepare the journal entries needed in 2024.
5. How much is the interest expense incurred by Wonder in 2024?
6. Determine the carrying amount of the bonds on December 31, 2024.
7. Compute the interest expense incurred by Wonder in 2025.
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