Problem 5 - 7

White Company issued P8,000,000, 12% bonds payable on December 31, 2022 at 96. Interest is payable annually on Decembe
Bond Maturity Amount
December 31, 2024 1,000,000 Discount
December 31, 2025 1,000,000 100%
December 31, 2026 1,000,000 96%
December 31, 2027 1,000,000 4.00%
December 31, 2028 2,000,000
December 31, 2029 2,000,000
December 31, 2030 0 12%
8,000,000

Journal Entries
Dec 31, 2022 Cash (3M*.96) 7,680,000
Discount on Bonds Payable (3M*.04) 320,000
Bonds Payable (@Face Value) 8,000,000
#
Dec 31, 2023 Interest Expense (8M*12%) 960,000
Cash 960,000
#
Interest Expense (A1) 64,000
Discount on Bonds Payable 64,000
#
Dec 31, 2024 Interest Expense (8M*12%) 960,000
Cash 960,000
#
Interest Expense (A2) 64,000
Discount on Bonds Payable 64,000
#
Bonds Payable (retirement) 1,000,000
Cash 1,000,000
#
Dec 31, 2025 Interest Expense (7M*12%) 840,000
Cash 840,000
#
Interest Expense (A3) 56,000
Discount on Bonds Payable 56,000
#
Bonds Payable (retirement) 1,000,000
Cash 1,000,000
#
Dec 31, 2026 Interest Expense (6M*12%) 720,000
Cash 720,000
#
Interest Expense (A4) 48,000
Discount on Bonds Payable 48,000
 #
Bonds Payable (retirement) 1,000,000
Cash 1,000,000
#
Dec 31, 2027 Interest Expense (5M*12%) 600,000
Cash 600,000
#
Interest Expense (A5) 40,000
Discount on Bonds Payable 40,000
#
Bonds Payable (retirement) 1,000,000
Cash 1,000,000
#
Dec 31, 2028 Interest Expense (4M*12%) 480,000
Cash 480,000
#
Interest Expense (A6) 32,000
Discount on Bonds Payable 32,000
#
Bonds Payable (retirement) 2,000,000
Cash 2,000,000
#
Dec 31, 2029 Interest Expense (2M*12%) 240,000
Cash 240,000
#
Interest Expense (A7) 16,000
Discount on Bonds Payable 16,000
#
Bonds Payable (retirement) 2,000,000
Cash 2,000,000
at 96. Interest is payable annually on December 31.
Outstanding Balance Discount
8M * 4%
Beg. 2023 8,000,000 - 8M/40M * 320,000 =
full price 2024 8,000,000 - 8M/40M * 320,000 =
selling price 2025 7,000,000 - 7M/40M * 320,000 =
2026 6,000,000 - 6M/40M * 320,000 =
2027 5,000,000 - 5M/40M * 320,000 =
2028 4,000,000 - 4M/40M * 320,000 =
B/P Rate 2029 2,000,000 - 2M/40M * 320,000 =
2030 0- 0/40M * 320,000 =
TOTAL: 40,000,000

2022 Current Long-Term Total

Bonds Payable - 8,000,000 8,000,000
Discount on Bonds Payable - 320,000 320,000
Carrying Value - 7,680,000 7,680,000

2023 Current Long-Term Total

Bonds Payable 1,000,000 7,000,000 8,000,000
Discount on Bonds Payable 64,000 192,000 256,000
Carrying Value 936,000 6,808,000 7,744,000

2024 Current Long-Term Total

Bonds Payable 1,000,000 6,000,000 7,000,000
Discount on Bonds Payable 56,000 136,000 192,000
Carrying Value 944,000 5,864,000 6,808,000

2025 Current Long-Term Total

Bonds Payable 1,000,000 5,000,000 6,000,000
Discount on Bonds Payable 48,000 88,000 136,000
Carrying Value 952,000 4,912,000 5,864,000

2026 Current Long-Term Total

Bonds Payable 1,000,000 4,000,000 5,000,000
Discount on Bonds Payable 40,000 48,000 88,000
Carrying Value 960,000 3,952,000 4,912,000
 2027 Current Long-Term Total
Bonds Payable 2,000,000 2,000,000 4,000,000
Discount on Bonds Payable 32,000 16,000 48,000
Carrying Value 1,968,000 1,984,000 3,952,000

2028 Current Long-Term Total

Bonds Payable 2,000,000 0.00 2,000,000
Discount on Bonds Payable 16,000 0.00 16,000
Carrying Value 1,984,000 0.00 1,984,000

2029 Current Long-Term Total

Bonds Payable 0.00 0.00 0.00
Discount on Bonds Payable 0.00 0.00 0.00
Carrying Value 0.00 0.00 0.00
amortization
64,000 A1
64,000 A2
56,000 A3
48,000 A4
40,000 A5
32,000 A6
16,000 A7
0 A8
320,000