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Compute for the issue price of the bonds

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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.

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: EM132709760

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