Question: On 1st April, 2019, a company issues RO 600,000 of l0-year, 10 percent bonds at 97. The bonds are dated January 1st, 2019. Interest is

On 1st April, 2019, a company issues RO 600,000 of l0-year, 10 percent bonds at 97. The bonds are dated January 1st, 2019. Interest is payable 1st Jan and 1st July. The bonds will be outstanding for 9 years and 9 months or 117 months.

Requirements: Record appropriate journal entries:

Amortization of premium: Reducing the interest expense

Amortization of discount: Increasing the Interest Expense

Convertible bonds have features of: equity and bond

When the contractual rate of interest of a bond is more than the market rate of interest the bonds are said to be issued at premium

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