Bonds Payable Worksheet

Issuance of Bonds at a premium

An entity issued bonds with face amount of P5,000,000 at 105. the quoted price of 105%
Assuming: Maturity for 5 year from the date of issue, have interest 6% annualy

Cash (5M x 1.05) 5,250,000

Bonds payable 5,000,000
Premium on Bonds Payable 250,000

Issuance of Bonds at a discount

An entity issued bonds with face amount of P5,000,000 at 95

Cash (5M x .95) 4,750,000

Discount on Bonds payable 250,000
Bonds payable 5,000,000
Face amount of Bonds 5,000,000 Presentation of Discount and Premium
Stated Interest 6%
Interest Expense 300,000 Face amount of Bonds 5,000,000
Less: unamotized discount on bonds 250,000
Premium Amortization Carying value of Bonds 4,750,000
(250/5) 50,000
Net Interest Expense 250,000 Face amount of Bonds 5,000,000
Add unamotized premium on bonds 250,000
Carying value of Bonds 5,250,000

Discount on Bonds
(250/5) 50,000
Net Interest Expense 350,000
Bonds Payable
Worksheet

Issuance of Bonds at Premium Between Interest dates

On October 1, 2020, Shane Company issued 5,000 12% bonds with face amount of P1,000 per bond at 110.
The bonds which mature on January 1, 2025, pay interest semiannually on January 1 and July 1. The entity
paid bond issue cost of P200,000

How much Cash was received from the issuance of the bonds?

Bonds issue at Premium amount (5,000 x 1,000 x 1.1) 5,500,000

Accrued interest (5,000,000 x 12% x 3/12) 150,000
Cash amount received on issuance of bonds 5,650,000
Less: Bond issue cost 200,000
Net Cash received on issuance of bonds 5,450,000

Issuance of Bonds at discount Between Interest dates

On April 1, 2020, Greg Company issued, at 99 plus accrued Interest. 4,000 8% bonds with face amount of P1,000 per bonds
The bonds are dated January 1, 2020, mature on january 1, 2030, and pay interest on January 1 and July 1. the entity paid
bond issue cost of P140,000

How much cash was rceived from the bond issuance?

Bonds issue at a Discount amount (4,000 x 1,000 x .99) 3,960,000

Accrued interest ( 4,000,000 x 8% x 3/12) 80,000
Cash amount received on issuance of bonds 4,040,000
Less: Bond issue cost 140,000
Net Cash received on issuance of bonds 3,900,000
 Face amount of Bonds 5,000,000
Stated Interest 12% 12%
Interest Expense 600,000

Semi annualy Interest 300,000

mount of P1,000 per bonds

and July 1. the entity paid
Bonds Payable
Worksheet

An entity issued bonds with face amount of P5,000,000 at 105 or a premium of P250,000
Subsequently, the entity reacquired P1,000,000 face amount to be placed in the treasury at 103.
at the time of the reacquisition, the unamortized premium balance is P200,000, and accrued interest on the
treasury bonds is P30,000 which is paid in cash.

Cash 5,250,000
Bonds Payable 5,000,000
Premium on Bonds 250,000

Journal Entry - Reacquistion of TB

Treasury Bond 1,000,000 Face amount of Bonds
Premium on Bond (1/5 x200k) 40,000 add; premium on bonds
Interest Expense 30,000 Carrying value of Bonds
Cash 1,060,000
Gain on Reacquisition of TB 10,000 less: Reacquisition price of TB
(1M x 1.03)
Gain of reacquisition of TB

Bonds payable 1,000,000

Treasury Bond 1,000,000 Reacquisition price of TB
add: Interest Expenses
Cash Payment
 interest on the

unt of Bonds 1,000,000

40,000
alue of Bonds 1,040,000

tion price of TB
1,030,000
acquisition of TB 10,000

tion price of TB 1,030,000

30,000
1,060,000
Bonds Payable
Worksheet

Straight Line Method Premium Interest

Year Amortization Expense
Face amount of bonds 5,000,000 2020 50,000 600,000
Issue price 5,250,000 2021 50,000 600,000
Date of bonds January 1,2020 2022 50,000 600,000
Maturity Date January 1,2024 2023 50,000 600,000
Interest rate 12% 2024 50,000 600,000
Interest Date ANNUAL 250,000 3,000,000

Straight Line Method Discount Interest

Year Amortization Expense
Face amount of bonds 5,000,000 2020 50,000 600,000
Issue price 4,750,000 2021 50,000 600,000
Date of bonds January 1,2020 2022 50,000 600,000
Maturity Date January 1,2024 2023 50,000 600,000
Interest rate 12% 2024 50,000 600,000
Interest Date ANNUAL 250,000 3,000,000

Bond Outstanding Method

Journal Entries 2020
Face amount of bonds 5,000,000
Issue price 5,300,000 Jan 1.
Date of bonds January 1,2020 Cash
Date of Issue January 1,2020
Interest rate 12%
Semiannual Interest dates June 30 and December 31 Issuance of Bonds
30-Jun
Premium Interest Interest Interest Expenses
Year Bond Oustanding Fraction Amortization Expense Paid
2020 5,000,000 5/15 100,000 600,000 500,000 Semiannual Interest expe
2021 4,000,000 4/15 80,000 480,000 400,000 31-Dec
2022 3,000,000 3/15 60,000 360,000 300,000 Interest Expenses
2023 2,000,000 2/15 40,000 240,000 200,000
2024 1,000,000 1/15 20,000 120,000 100,000 Semiannual Interest expe
15,000,000 300,000 1,800,000 1,500,000 31-Dec
Premium on Bonds payabl

Amortization of Premium
Bonds payable

Payment for the First Seri

 Interest Cash 5,300,000
Paid Bonds Payable 5,000,000
550,000 Premium on Bonds 250,000
550,000
550,000 Premium on Bonds 50,000
550,000 Interest Expense 50,000
550,000
2,750,000 Interest Expense 600,000
Cash 600,000

Interest Cash 4,750,000

Paid Discount on Bonds 250,000
650,000 Bonds Payable 5,000,000
650,000
650,000 Interest expense 50,000
650,000 Discount on Bonds 50,000
650,000
3,250,000 Interest Expense 600,000
Cash 600,000

Journal Entries for 2021

30-Jun
5,300,000 Interest Expenses 240,000
Bonds payable 5,000,000 Cash 240,000
Premium on Bonds 300,000 Semiannual Interest expenses
suance of Bonds

nterest Expenses 300,000 31-Dec Interest expense 240,000

Cash 300,000 cash 240,000
emiannual Interest expenses Semiannual Interest expenses
31-Dec Premium on Bonds payable 80,000
nterest Expenses 300,000 Interest expenses 80,000
Cash 300,000 Amortization of Premium
emiannual Interest expenses
31-Dec Bonds payable 1,000,000
remium on Bonds payable 100,000 Cash 1,000,000
Interest Expenses 100,000 Payment for the Second Series of Bonds
mortization of Premium
onds payable 1,000,000
Cash 1,000,000
ayment for the First Series of Bonds
Bonds Payable
Worksheet

White Company issued P8,000,000 12% Bonds on December 31, 2020 at 96. Interest is
payable annually on December 31.

Discount Interest Interest

Year Bond Oustanding Fraction Amortization Expense Paid
2021 8,000,000 8/40 64,000 960,000 1,024,000
2022 8,000,000 8/40 64,000 960,000 1,024,000
2023 7,000,000 7/40 56,000 840,000 896,000
2024 6,000,000 6/40 48,000 720,000 768,000
2025 5,000,000 5/40 40,000 600,000 640,000
2026 4,000,000 4/40 32,000 480,000 512,000
2027 2,000,000 2/40 16,000 240,000 256,000
40,000,000 320,000 4,800,000 5,120,000

Required:

a. Prepared a schedule showing the annual amortization of the Bond outstanding

b. Prepare Journal Entries from 2020 to 2023

Cash 7,680,000
Discount on Bonds 320,000
Bonds payable 8,000,000
BOND Series of Payment MATURITY
December 31
2022 1,000,000
2023 1,000,000
2024 1,000,000
2025 1,000,000
2026 2,000,000
2027 2,000,000
Bonds Payable
Worksheet

On January 1, 2020 an entity issued bonds payable with face amount of P5,000,000 and
10% stated interest rate for 4,800,000

The Bond have a 5 year term and interest is payabale annually Every December 31

The entity elected the FAIR VALUE OPTION in Measuring the bonds payable

on December 31, 2020 the fair value of the bond is 5,500,000

it is reliably determined that the fairvalue increase of P700,000 comprised P200,000

attributable to credit risk and P500,000 attributable to change in the market interest rate.

Provide Journal Entries

Fairvalue not designated through profit and loss

Cash 4,800,000
Discount on bonds 200,000
Bonds Payable 5,000,000

Fairvalue designated through profit and loss

Cash 4,800,000
Bonds Payable 4,800,000

Interest Expense 500,000

Cash (5M x 10%) 500,000

Loss on Credit risk - OCI 200,000

Loss from Change in Fairvalue - P & L 500,000
Bonds payable 700,000

Bonds Payable 5,500,000