Problem 1: On January 1, 2011, an entity issues bonds with face amount of P5,000,00 for P5,733,129. The bonds mature on December 31, 2013 and pay annual interest of 14%, The effective interest rate is 8%. a. Prepare the amortization table for the bonds and the required journal entries. b. Prepare all the journal entries during the term of the bonds.
Problem 1: On January 1, 2011, an entity issues bonds with face amount of P5,000,00 for P5,733,129. The bonds mature on December 31, 2013 and pay annual interest of 14%, The effective interest rate is 8%. a. Prepare the amortization table for the bonds and the required journal entries. b. Prepare all the journal entries during the term of the bonds.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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PROBLEM 2 ONLY
Transcribed Image Text:Problem 1:
On January 1, 2011, an entity issues bonds with face amount of P5,000,00 for P5,733,129. The bonds
mature on December 31, 2013 and pay annual interest of 14%. The effective interest rate is 8%.
a. Prepare the amortization table for the bonds and the required journal entries.
b. Prepare all the journal entries during the term of the bonds.
Problem 2:
On January 1, 2011, an entity issues bonds with face amount of P8,000,00 for P8,600,000. The bonds
mature on December 31, 2014 and pay annual interest of 11%, The effective interest rate is 9%. The
entity incurs transactions cost of P81,645.
Required:
a. Compute for the initial valuation of the bonds.
b.
Compute for net discount or premium from the initial recognition
C. Are the periodic interest payments greater than or less than the periodic interest expenses?
d. Prepare all the journal entries during the term of the bonds.
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