Question $1$

On $1$ July $2022$ Michaela Ltd issues $$1$ million in five$-$year debentures that pay interest each six months at a coupon rate of $10\%.$ At the timing of issuing the securities$,$ the market requires a rate of return of $8\%.$ Interest is determined using the effective method.

Required

a$)$ Determine the issue price

b$)$ Provide the journal entries at:

$($i$)1$ July $2022$

$($ii$)30$ June $2023$

$($iii$)30$ June $2024$

Question $2$

On $1$ July $2022$ Rankin Ltd issues $$1$ million in $10-$year debentures that pay interest each six months at a coupon rate of $10\%.$ At the timing of issuing the securities$,$ the market requires a rate of return of $12\%.$ Interest is determined using the effective method.

Required

a$)$ Determine the issue price

b$)$ Provide the journal entries at:

I. $1$ July $2022$

II$.30$ June $2023$

III. $30$ June $2024$