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Compute the purchase price of the bonds

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Reference no: EM132955026

Question - At the beginning of current year, Havoc Company purchased ten-year bonds with a face amount of P5,000,000.

The stated interest rate is 8% per year payable semiannually June 30 and December 31. The bonds were acquired to yield 10%

Present value of 1 for 10 periods at 10% 0.386

Present value of 1 for 20 periods at 5% 0.377

Present value of an annuity of 1 for 10 periods at 10% 6.145

Present value of an annuity of 1 for 20 periods at 5% 12.462

Required -

a. Compute the purchase price of the bonds.

b. Prepare journal entries for the current year.

Reference no: EM132955026

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