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Compute the book value of the investment in bonds

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Reference no: EM132654466

On January 1, 2020, the Maxell Company purchased P400,00 of 6% term bonds. The bonds are dated January 1, 2020, and the interest is payable semiannually on June 30 and December 31. At the time the bonds were purchased the market interest rate was 8%. The bonds mature on December 31, 2030. Maxell Company uses the effective interest method of amortization.

Instruction:

Problem 1: Compute the following:

  1. issue price of the bonds on January 1, 2020
  2. total amount of interest revenue for 2020 
  3. book value of the investment in bonds on December 31, 2020

Reference no: EM132654466

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