Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

PART B [21 Mark 32 minutes] On 31 December 2019, Capewines Limired issued R4,000,000 (face value) of bonds. The bonds are dated 30 December

image text in transcribed

PART B [21 Mark 32 minutes] On 31 December 2019, Capewines Limired issued R4,000,000 (face value) of bonds. The bonds are dated 30 December 2019, pay interest annually on 5 January, and will mature on 31 December 2022. The following incomplete schedule was prepared by the accountant for 2020. Annual Interest to Interest Period be Paid Interest Expense Bond Amortisation Carrying Value R3,900,000 2020 R320,000 R351,000 R31,000 3,931,000 You are required: Based on the above information, answer the following questions. (Round your answer to the nearest Rand or percent.) i. What is the stated interest rate for this bond issue? [2 marks] ii. What is the market interest rate for this bond issue? [2 marks] iii. What was the selling(issue) price of the bonds as a percentage of the face value? [2 marks] iv. Prepare the journal entry to record the sale of the bond issue on 31 December 2019. [2 marks] V. Complete the amortisation scheduled not completed by the accountant. [4 marks] vi. Prepare the general journal entry to record the payment of interest and interest expense in respect of the first bond interest period [4 marks]. vii. Redeemable preference shares are the similar to debt securities. Write brief notes to agree or disagree with this statement. [4 marks]

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Advanced Financial Accounting

Authors: Thomas Beechy, Umashanker Trivedi, Kenneth MacAulay

6th edition

013703038X, 978-0137030385

More Books

Students also viewed these Accounting questions

Question

Apply a stakeholder analysis to a problem.

Answered: 1 week ago