Balantine Ltd issued 1 000 10% secured redeemable debentures of R100 each at a discount of 95% on 1 January 20x3. Interest is payable twice yearly on 31 December and 30 June. The effective interest rate is 6.06%.

The company’s financial year end is 31 December. The debentures are redeemable on 31 December 20x7 at a premium of 105%.

You are required to:

1. Prepare the necessary journal entries for the year ended 31 December 20x4.

2. Prepare the relevant extracts from the financial statements for the year ended 31 December 20x4. (Notes to the financial statements are not required.)