Journal entries during the term of the bonds

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On January 1, 2011, an entity issues bonds with face amount of P8,000,00 for P8,600,000. The bonds mature on December 31, 2014 and pay annual interest of 11%, The effective interest rate is 9%. The entity incurs transactions cost of P81,645.

Required:

Question a. Compute for the initial carrying amount of the bonds.

Question b. Compute for net discount or premium from the initial recognition

Question c. Are the periodic interest payments greater than or less than the periodic interest expenses?

Question d. Journal entries during the term of the bonds.

Reference no: EM132685840

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