The following information relates to a debentures issue of Justice Ltd dated 1 January 2017:

Date issued Nominal value Stated interest rate Interest payment dates Term to maturity Cash received from the issue

1 January 2017 $1000 8% 30 June and 31 December 8 years $500000

The company’s financial year-end is 30 June.

Required

A.    Prepare general journal entries to record:

1.  the issue of the debentures

2.  the 30 June and 31 December 2017 interest payments

3.  the 30 June 2018 interest payment.

B. Calculate the interest expense for the year ended 30 June 2018, and prepare the entry to close the Interest Expense account to the Profit or Loss Summary account.

C. Show how the debentures will be reported at 30 June 2018.