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Compute the effective interest rate

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Question - On March 2, 2020, VWX Co. received authorization to issue P6,000,000, 5-year bonds with interest of 12% per annum, payable every Mar.20d. The bonds were issued at 103.5% (net of bond issue cost) on the same date. The company will use the amortized cost method.

Required -

1. Compute the effective interest rate. Carry computations up to the three decimal places.

2. Prepare a premium amortization table. Carry computations to the nearest whole peso.

3. Prepare the 2020 entries including year-end adjustments (Dec. 31) and a compound closing entry.

Reference no: EM133074023

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