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Compute for the issue price of the bonds

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Reference no: EM132670125

Problem 1: On January 1, 20x1, an entity issues 14%, 3-year, P5,000,000 bonds at a price that reflects a yield rate of 8%. Compute for the issue price of the bonds.

Problem 2: On January 1, 20x1, an entity issues bonds with face amount of P5,000,000 for P5,773,129. The bonds mature on December 31, 20x3 and pay annual interest of 14%. The effective interest rate is 8%. On December 31, 20x2, after paying the annual interest, the entity retires the bonds at a call premium of P400,000. Provide entry on December 31, 20x2 to record the retirement of the bonds.

Reference no: EM132670125

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