Question: Question 3 (7 marks) (This question is from the Week 8 Tutorial) BDX company issues $ 15 million of five-year, 6.5 per cent, semi-annual coupon

Question 3 (7 marks)

(This question is from the Week 8 Tutorial)

BDX company issues $ 15 million of five-year, 6.5 per cent, semi-annual coupon debentures to public which pay interest each six months. The market also requires a rate of return of 6.5 per cent. Assume that the moneys come in and the debentures are allocated on the same day, 30th June, 2019.

Required:

Provide the accounting entries at 30th June, 2019, 31st December, 2019 and 30th June, 2024 to record:

(a) The receipt of funds. (2 marks)

(b) The first payment of interest (2 marks)

(d) In your own words, explain how you would determine the discount or premium on a

debenture issue? (1 mark)

HA3011 Advanced Financial Accounting Tutorial Questions Assignment

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