Question
10. On January 1, 2020, Bishop Company issued 10% bonds dated January 1, 2020 with a face amount of P20,000,000. The bonds. mature on
10. On January 1, 2020, Bishop Company issued 10% bonds dated January 1, 2020 with a face amount of P20,000,000. The bonds. mature on December 31, 2029. For bonds of similar risk and maturity, the market yield is 12%. Interest is paid semiannually on June 30 and December 31. The PV of 1 at 6% for 20 periods is 0.3118 and the PV of an ordinary annuity of 1 at 6% for 20 periods is 11.47. Required: 1. Determine the price of the bonds on January 1, 2020. 2. Prepare the journal entry to record the bond issuance on January 1, 2020. 3. Prepare the journal entry to record interest expense on June 30, 2020 using the effective interest method. 4. Prepare the journal entry to record interest expense on December 31, 2020 using the effective interest method.
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