On 1 July 2018, Grommet Ltd issues a five-year bonds with a total face value of $1,000,000 and a coupon rate of 10% per annum, payable annually in arrears. The market required interest rate for the Bond was 8%. 

 REQUIRED:

1.     Provide the journal entry to issue of the bond for Grommet Ltd on 1 July 2018.  (2 Marks)

 2. Calculate the amortized cost of the bonds as at 30 June 2019 by preparing a schedule of amortized cost/interest payment. (3 marks)

 3. Provide the journal entry to account for the year ending 30 June 2019. (2 marks)