On1 july 2018 bmw ltd issues $2 million in 10 year debentures that pay interest each six month at coupon rate of 10%.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.

Formula for PV of $1in n periods =1/(1+k)n

Formula for present value of annuity of $1 per period for n periods =1-1/(1+k)n

Where k is the discount rate expressed in decimal

Required:

1. Determine the issue price of the debentures.

2.provide the journal entries at 1 july 2018 and 30 june 2019.