15 On 1 January 2017 Sun City Limited issued $9,000,000 of 15 years, 10% per annum debentures that pay interest every six months. At the time of issuing the debentures, the market required a rate of return of 12% per annum. Required: (a) Calculate the issue price of the debentures as at 1 January 2017 (to the nearest dollar) PV of Principal PV of Interest Annuity (b) Prepare general journal entries to record the issue of the debentures as at 1 January 2017. Dr Bank Cr Debenture Liability (c) Prepare general journal entries to record the payment of interest and increase or decrease in debenture liability for the six monthly period ending 30 June 2017. Dr Interest Expense Cr Debenture Liability Cr Bank Question 16 Waikato Limited entered into a non-cancellable, ten-year lease agreement with Hillcrest Limited on 1" January 2017. The lease was for a factory equipment that is expected to have an economic life of 15 years, after which time it will have no salvage value. There is a bargain option, which Hillcrest Limited will be able to exercise at the end of the tenth year, for $12,500. Waikato Limited manufactured the equipment at a cost of $428,000. There are to be ten annual instalments of $67,500 per annum. Included in the annual lease payment is an amount of $7,500 per annum representing payment to Waikato Limited for insurance and maintenance of the equipment. The rate of interest implicit in the lease is 24 per cent. Required (a) Calculate the present value of the minimum lease payments Annual instalments Bargain purchase PV of minimum lease payments (b) Prepare journal entries in the books of Waikato Limited to record the lease transaction on 1 January 2017. Date Details Lease Receivable Sales COGS Inventory Debit Credit (c) Prepare journal entries in the books of Waikato Limited to record the annual lease payment received for years ended 31 December 2017. Date Details Debit Credit Cash Executory cost Interest revenue Lease receivable (d) Prepare journal entries (without narrations) in the books of Hillcrest Limited to record the lease transaction on 1 January 2017 Date Details Lease factory equipment Lease Payable Debit Credit cent. Required (a) Calculate the present value of the minimum lease payments Annual instalments Bargain purchase PV of minimum lease payments (b) Prepare journal entries in the books of Waikato Limited to record the lease transaction on 1 January 2017. Date Details Lease Receivable Sales Debit Credit COGS aventory (c) Prepare journal entries in the books of Waikato Limited to record the annual lease payment received for years ended 31 December 2017. Date Details Cash Executory cost Interest revenue Lease receivable Debit Credi (d) Prepare journal entries (without narrations) in the books of Hillcrest Limited to record the lease transaction on 1 January 2017 Date Details Lease factory equipment Lease Payable Debit Credit (c) Prepare journal entries in the books of Hillcrest Limited to record the annual lease payment paid for years ended 31 December 2017. Date Details Executory cost Debir Credit Interest expense Lease payable Cash