On 1 July 2018 Rankin Ltd issues $1 million in 10-year debentures that pay interest each six

months at a coupon rate of 10 per cent. At the time of issuing the securities, the market

requires a rate of return of 12 per cent. Interest expense is determined using the effective

interest method.

Required

:

(a)

Determine the issue price.

(b)

Provide the journal entries at:

(i)

1 July 2018

(ii)

30 June 2019

(iii)

30 June 2020