Exercise 16.7

Issue of debentures

On 1 June, Charteris Aviation received authorisation from its board of directors to issue $1 900 000 of 5% 10-year debentures dated 1 July. Interest is payable half-yearly on 31 December and 30 June each year.

Required

(a)Record the issue of the debentures in general journal entry form, assuming allotment of all debentures on 1 July.

(b)Record interest payments for 31 December and 30 June in the first financial year of issue