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Financial Instruments Loan note Note 1 3 ( a ) On 1 April 2 0 X 8 Hop issued 5 0 , 0 0 0
Financial Instruments Loan note Note a
On April X Hop issued loan notes at a discount of These loan notes are redeemable at a premium, meaning that the effective rate of interest is The initial loan note issue has been recorded in the trial balance above. In accordance with the loan note a payment of was made on March X but this has not yet been recorded.
Financial Instruments Convertible bond Note b
On April X Hop issued convertible bonds at par. The bond interest is payable annually in arrears, the first interest payment was made on March X They have a threeyear term and can be convertible into shares at the end of the term. When the bonds were issued the prevailing market interest rate for similar debt without conversion options is The relevant discount factors are shown below. No accounting entries have yet been made for this transaction.
Show the journals CrDr
In the trial Balance the Loan note is Cr
Discount factors
Year
Year
Year
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