Reference no: EM132862060

PROBLEM 1 - On January 1, 2022, Brandy Company issued a P 100,000, 9%, four year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at P 96,768 to yield an annual return of 10%.

Required -

1. Prepare the amortization schedule

2. Prepare the Journal entries

3. Assuming the market rate is still at 10%, what price would the second investor pay the first investor on June 30, 2024, for P 10,000 of the bonds?

PROBLEM 2 - On February 1, 2022, Speedy Motors issued 9%, P 80 Million bonds, dated February 1. The bonds will mature on January 31, 2026. The market rate for bonds of similar risks and maturity was 10%. Interest is paid semiannually on July 31and January 31. Glean Industries acquired P 80,000 of the bonds as long term investment. The financial year of both firms end December 31.

1. Determine the price of the bonds at issuance date.

2. Provide amortization schedule for both firms during the term to maturity.

3. Prepare Journal entries for both firms during the term to maturity.