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Prepare journal entries to record bond-related transactions

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Question - On June 1, 2002, Jefferson Controls, Inc. issued P12,000,000 of 10 percent bonds to yield 12 percent. Interest is payable semiannually on May 31 and November 30. The bonds mature in 15 years. Jefferson Controls, Inc. is a calendar-year corporation.

Required -

(1) Determine the issue price of the bonds. Show computations.

(2) Prepare an amortization table through the first two interest periods using the effective- interest method.

(3) Prepare the journal entries to record bond-related transactions as of the following dates:

(a) June 1, 2002

(b) November 30, 2002

(c) December 31, 2002

(d) May 31, 2003

Reference no: EM133112477

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