Question: Corona Ltd issued 5 - year bonds with a total face value of$500 000and which paid interest of$50 000annually in arrears on 1 July 2019.

Corona Ltd issued 5 - year bonds with a total face value of$500 000and which paid interest of$50 000annually in arrears on 1 July 2019. The market-required interest rate for Corona Ltd's bonds was 12 per cent and the following information is given for you:

Present value of 12% for 5 years = 0.567

Annuity factor of 12% for years = 3.605

Required:

Prepare the journal entry to issue the bonds at 1 July 2019, and the entry at 30 June 2020 to record the interest paid.

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