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What is interest expense using the effective-interest method

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Problem 1: A company issues P5,000,000, 7.8%, 20-year bonds to yield 8% on January 1, 2019. Interest is paid on June 30 and December 31. The proceeds from the bonds are P4,901,036. Using effective-interest amortization, how much interest expense will be recognized in 2019?

Problem 2: On January 1, 2019, FLO-RES Co. sold 12% bonds with a face value of P600,000. The bonds mature in five years, and interest is paid semiannually on June 30 and December 31. The bonds were sold for P646,200 to yield 10%. Using the effective-interest method of amortization, interest expense for 2019 is

Reference no: EM132793263

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