On January 1, 20x1, an entity issues bonds with face amount of P5,000,000 for P5,773,129. The bondsmature on December 31, 20x3 and pay annual interest of 14%. The effective interest rate is 8%. How much isthe carrying amount of the bonds on December 31, 20x2?

The bonds are issued at premium when market rate is lower than the stated rate of interest on bonds.

Answered: On January 1, 20x1, an entity issues…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 7EA: On Jan. 1, Year 1, Foxcroft Inc. issued 100 bonds with a face value of $1,000 for $104,000. The...

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On January 1, 20x1, an entity issues bonds with face amount of P5,000,000 for #5,773,129. The bonds mature on December 31, 20x3 and pay annual interest of 14%. The effective interest rate is 8%. How much is the carrying amount of the bonds on December 31, 20x2?