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3-1. Determine the purchase price of the following debt securities that Ace Company intends to purchase: (a) 10%,P5,000,000 face value, five-year bonds dated June 30,2022
3-1. Determine the purchase price of the following debt securities that Ace Company intends to purchase: (a) 10%,P5,000,000 face value, five-year bonds dated June 30,2022 , for purchase on July 1, 2022; interest payment dates are June 30 and December 31 . (b) 6%,P10,000,000 face value, ten-year bonds, dated June 30,2020 , for purchase on July 1,2022 , interest payment date is June 30 . The market rate of interest on July 1,2022 is 8%. -2. On January 1, Year 1, Abu Company acquired 5-year, 15\%, P8,000,000 face value bonds for P8,274,646. Based on the company's business model and the contractual cash flow collectible from this instrument, Abu Company designates the bonds as bond investments at amortized cost. Interest on the bonds is payable annually on December 31 . Abu acquired the investments at a price to yield 14%. REQUIRED: (a) Prepare an amortization schedule using the effective interest method. Complete the table below. (b) Prepare journal entries for Year 1 and Year 2
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