I and July 1 Present value of an annuity of 1 for 10 periods at 5% Present value of an annuity of 1 for 10 periods at 4% Present value of 1 for 10 periods at 4% 7.12 8.11 0.6756 Required: a. Compute the market price of the bonds. b. Prepare journal entries for the current year. The effective interest method of amortization is used. C. Compute the carrying amount of the bond investment at year-end. Problem 20-12 (IAA) On January 1, 2020, Labyrinth Company purchased serial bonds with face amount of P3,000,000 and stated 12% interest payable annually every December 31. The bonds are to be held as financial assets at amortized cost with a 10% effective yield. The bonds mature at an annual installment of P1,000,000 every December 31. Present value of 1 at 10% for one period Present value of 1 at 10% for two periods Present value of 1 at 10% for three periods 0.91 0.83 0.75 Required: 1. Compute the market price of the bonds. 2. Prepare journal entries for 2020. The effective interest method of amortization is used. 3. Compute the carrying amount of the bond investment on December 31, 2020. 569