Compute the amount of interest expense recorded

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Reference no: EM132836078

Problem - On November 1, 2020, A Company issued its 9% callable bonds in the face amount of P2.5 M which matures on October 31, 2030. The market rate of the bonds is 12%. The interest payment date is on April 30 and October 31. A Company uses the effective interest of amortizing discount and premium.

Use the table below to compute the present values:

 

12%

9%

6%

4.5%

The present value of 1 for 10 periods

0.3220

0.4224

.5584

0.6439

The present value of 1 for 20 periods

0.1037

0.1784

0.3118

0.4146

The present value of an ordinary annuity for 10 periods

5.650

6.4177

7.361

7.9127

The present value of an ordinary annuity for 20 periods

7.469

9.1286

11.4699

13.0079

Required -

1. Compute the issue price of the bonds.

2. Complete the amortization table below: Round-off your answer to whole numbers.

3. Compute the amount of interest expense recorded on the December 31, 2020 journal entry.

4. Compute the carrying amount of the Bonds Payable on December 31, 2020.

Reference no: EM132836078

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