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Hi I just wanted some assistance in figuring if the answers I did to this question were correct or not, if there were any errors
Hi I just wanted some assistance in figuring if the answers I did to this question were correct or not, if there were any errors would you please say which ones and how to properly do them thanks.
Chapter 10.24 (Question 2. Accounting for Liabilities.) On 1 July 2022 BBG LTD issues \$1million five year bonds. Pays interest every 6 months at a coupon rate of 10%. At the time the market requires rate of return of 8% determined using effective interest method. a) Calculate the issue price b) Provide journal entries at 1 July 2022 c) Provide journal entries at 30 June 2022 d) Provide journal entries at 30 June 2023 e) Provide journal entries at 30 June 2024 a) PVofprincipal=$1,000,0000.6756PVofAnnuity=$50,0008.1109=$675,600=$405,545=$1,081,145 b) Dr Cash $1,081,145 Cr Bond liability $1,081,145 (To recognise issue of bond) c) 30 June 2022 (period 2) Dr Interest expense $42,976 Bond liability $7,024 Cr Cash $50,000 (Recognise payment made on bond)Step by Step Solution
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