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Prepare entries as a result of the investment in the funds

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Reference no: EM132946866

Question - On January 2, 2019, Cordero Corporation issued P15,000,000 bonds that will mature in 10 years. The management decided to set up a separate fund for the retirement of these bonds. The fund is to be placed in a separate account to be maintained in the company's depository bank. In a board resolution, it was decided that deposits of equal amounts will be made every June 30 and December 31, starting June 30, 2019 through December 31, 2028. The company expects to earn an average interest of 8%, net of tax, on this investment.

Required -

(a) Determine the required semiannual deposit that will accumulate P15,000,000 at the end of ten years.

(b) Prepare entries during 2019 as a result of the investment in the funds.

Reference no: EM132946866

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