Question: QUESTION THREE Baba limited offered a sh 25m, 8%,5 year bond to finance its growth. The bond was offered at a discount of 10% and

QUESTION THREE Baba limited offered a sh 25m, 8%,5 year bond to finance its growth. The bond was offered at a discount of 10% and the total legal and other costs amounted to sh 1.5 million. Interest is payable annually in arrears and the bond is redeemable at the end of the 5 years at a premium of 2%. Required; (i) Compute the proceeds on issue of the bond (3 Marks) ii) Compute the effective rate of interest (3 Marks) 111 ) Prepare the amortization schedule of the bond (6 Marks) iv) Show the journal entries to record all the transactions

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