T2 Q3

On 1 October 2019, Little Tiger Corporation ( the Corporation) issued four-year, $8,000,000 (face value), 10% debentures which provide an effective yield of 12%. The interest is paid quarterly at the last day of each quarter with financial year-end on 31 December. The Corporation uses the effective interest rate method to calculate interest expense and amortization.

Required:

a) Calculate the market value of the debentures at issuance. (2 marks)

b) Prepare an amortization schedule containing relevant data through the life of the debentures. (4 marks)

c) Determine the carrying value of the debentures for the Corporation that would be disclosed on the month end statement of the financial position as of 31 May 2019. (3 marks)

d) Prepare the required journal entries for the following dates: (6 marks)

i. 1 October 2019 (to record debenture issuance)

ii. 31 March 2020 (to record quarterly interest payment of the debentures)

iii. 31 May 2021 (to accrue year-end interest of the debentures).

e) Repeat (a) to (d) assuming instead that the Corporation issued three-year, $8,000,000 (face value), 10% debentures which provide an effective yield of 8%. The interest is paid quarterly at the last day of each quarter with financial year-end on 31 May. (15 marks)

Table A Present value interest factor of S1 at i% for n periods (PVIF..) (PVIF.) = (1+i)" Period 14 24 24 4 4 14 14 14 124 139 14% 1.54 1.99010 .9901:39 .970187 0.06154 1.952:36 0.04540 4.93438 0. 93 0.91743 0.00 0.00 0.19 0.48496 0.87719 0.10987 4.980.90 0.90117 0.94260 0.42450 USUF035 0.89000 0.67344 0.85734 0.64100 0.808430.81162 0.19719 0.78315 0.78047 0.53814 0.97059 0.94232 0.91514 0.88900 0.66384 0.82052 0.6169 0.79363 0.27216 0.75131 0.73119 0.71176 0.691305 0.87 49: 0.85752 0.96098 0.92385 0.8B619 0.8540) 0.B2290 0.79209 0.76290 0.73803 0.70843 0.6k301 0.85373 0.83552 0.61332 0.59206 0.57195 0.951,17 0.90573 0.86261 0.82193 0.78353 0.74726 0.71299 0.61358 081993 0.67192 0.5945 058743 0.51278051937 0.19718 091205 0.8879 083748 0.79031 0.7 1622 0.70496 666 0.69017 05962 0.56117 053461 50663 0.18032 045559 043233 0.93272 0.87056 0.81309 0.75992 071068 0.66506 062275 0.56349 0 51703 0.51316 048166 045235 0.12.506 0.39964 0.37594 11.02748 185340 11.75041 0.7306 116768 0.62741 11.58201 0.54027 Smist 0.16651 043.993 11.40365 0.37616 nasms 0.328on 11.91494 11.63476 11.76042 0.701299 1164461 0.59190 11.54373 0.5002. 11.461143 0.43410 OW092 1.81161 0.2729802307.91 0.28420 11.9052 20:25 1.74409 0.07550 1.01391 0.3 1.50435 0.4619 0.42241 0.38354 055211 052197 0.29459 0.20474 0.24718 1.1962 0.60428 0.72242 0.64956 0.58406 0.32879 0.47509 0.42808 038733 0.11049 031726 0.26748 0.26070 0.25662 0.21494 0.88:45 0.78049 0.70138 0.62480 0.55684 0.49897 0.44401 0.39711035553 0.31663 0.28584 025668 0.23071 0.20756 0.18891 0.67666 0.77303 0.6B093 0.6005 0.53032 0.16B61 0.41198 0.38770 032616 0.2956 025751 022917 0.20415 0.18207 0.16253 0.86996 0.75788 066112 0.57718 0505070.14230 038782 0.34016 029925 0.28333 023199 020 162 0.18068 0.15971 0.1.1133 0 61350 1130106186055526048102 11727 036245 0.31521 027154 0.29939 020900018270 015989 014010 0127.89 085282 0.72845 0.62317 0.53391 0.15811 0.19365 033873 0.29189 0.25187 0.21763 0.18629 0.16312 0.14150 0.12.250 0.10686 11.44428 1171416 .GOSUZ 0.51337 11.4360 0.371.36 1.316.5T 0.27027 0.23107 0.19784 0.1693 0.14554 0.12.522 0.1070 0.09293 II. KY612 1.711116 11.567.39 0.4% 1141552 0.31.50.34 11.24586 0.2.9025 0.21199 0.17986 0.152X2 11.1:51104 11.11081 11.094.56 0.0180K1 LI. K2574 11.88645 1.57028 0.47464 50575 0.9051 1.276.51 0.2151 0.19449 0.16351 0.13705 0.11611 0.00 0.05293 0.07017 U.61954 0.87297 0.33368 0.45039 037689 0.31100 0.25842 0.21453 0.17543 0.14864 0.12405 0.10307 0.08096 .07276 0.00110 ACT 1X611 Page 5 Table B Present value interest factor of an (ordinary) annuity of Sl per period at i for n periods (PVIFA1,n) (PVIFA...) = (1+1) Period 1% 2% 3% 4% 59% 89% 8% 9% 10% 11% 12% 13% 14% 15% 0.99010 0.98039 0.970B 0.98154 0.95238 0.9 140 0.93158 0.92593 0.91743 0.90909 0.90090 0.89286 0.68198 0.87719 0.86957 1.97010 1.91156 1.91347 1.88609 1.89911 1.83339 1.70809 1.78326 1.75911 1.93554 1.71252 1.69005 166810 1.61666 1.62571 2.94099 2,88388 2.82861 2.77509 2.72323 2.67201 262132 2.57710 2.53129 24868 2.1-371 2.10183 2.36115 2.32163 2.28323 2.90197 3.807733.1710 3.62990 3.54505 3.16511 338721 3.31213 3.29972 3.16967 3.10243 3.09735 2.9744: 2.91371 2.85498 4.85:43 4.71.346 4.57971 4.45182 4.32045 4.21230 4.100 3.00271 3.88965 3. Ton70 3.60.500 3.60478 2.517232.43.18 3.85216 5.7954% 5.00143 5.41719 5.24214 5.075694.91 4.766.54 4.62.288 4.44.592 4.15505 4.2:5054 4.11141 1.997.55 2. 367 3.78448 6.72819 0.47109 0.28028 0.0020.3 5.76037 55808 358029 5.20037 5.09195 4.10842 4.71220 4.36.36 4.42201 4.260 4.16042 7.05168 22548 7.01989 6.73274 0.48521 0.20979 3.971390 5.74864 5.53462 353494 5.14512 4.06764 4.087 4.63880 4.48732 8.38002 C.16224 9.76811 5.43333 2.10:52 S.C0189 6.51523 3.24889 5.99525 5.25902 5.3370: 5.32625 5.13168 4.94637 4.77156 9.47130 8.98259 8.53020 B.11090 7.72173 36009 7.02358 .71008 .41766 6.14157 5.81923 5.65022 3.42624 5.21612 5.01B?? 10.25763 9.78685 9.25262 8.760 18 8.4611 7.88687 7.198677.13896 6.80519 6.9566 6.27652 5.93770 588691 3.152735.23371 11 25508 10.57531905100938507 8.88523838161 704260733608 716073 6.81369 6.19236 6.19437 591765 5.66029 S.12062 12.13374 11.31837 10.63199 9.985659.39357 8.85368 83576590378 TA8600 7.10236 6.74987 6.12355 6.121815.84236 5.58315 12.00370 12.10625 11.2960 10.56.212 9.89864 0.29408 8.545478.24424 T.78615 7.1igo 6.981876.62817 6.30240 6.0020? 5.72448 12.26511.5 12.84924 11.94794 11.118.99 10.379669.71 225 .10791 4.55948 .1606U 7.LOGOS 1.190876.81086 6.462:8 6.14217 5.847.17 14.71787 15.57771 12.56110 11.052.30 10.5777 10.103911 19.4460 6.65137 6:31 256 7.92371 .37916 6.07:599 6.00 6.2506 5.05423 13.38223 14.29187 13.10612 12.18567 11.27407 10.47726 9.583239.12164 6.543 8.021.337.34679 7.11963 6.2009 0.37286 8.04716 16.19827 14.99203 13.5351 12.65930 11.61959 10.02780 10.05909 9.2.189 0.335838.20141 7.80162 .2496 6.63991 6.48742 3.12797 17.22601 15.6.816 11.323B0 13.13394 12.0ES32 11.15 B12 1033580 9.60360 3.95011 838192 7.83929 3.36576 6.9379; 6.55037 S.19B23 2 1 8.6555 18.35113 11.87747 13.59033 12.16221 11.16992 10.59101 9.81B15 9.12855 3.51356 7.96333 7.46911702175 6.62313 6.25933 ACT 1X611 Page 6 Table A Present value interest factor of S1 at i% for n periods (PVIF..) (PVIF.) = (1+i)" Period 14 24 24 4 4 14 14 14 124 139 14% 1.54 1.99010 .9901:39 .970187 0.06154 1.952:36 0.04540 4.93438 0. 93 0.91743 0.00 0.00 0.19 0.48496 0.87719 0.10987 4.980.90 0.90117 0.94260 0.42450 USUF035 0.89000 0.67344 0.85734 0.64100 0.808430.81162 0.19719 0.78315 0.78047 0.53814 0.97059 0.94232 0.91514 0.88900 0.66384 0.82052 0.6169 0.79363 0.27216 0.75131 0.73119 0.71176 0.691305 0.87 49: 0.85752 0.96098 0.92385 0.8B619 0.8540) 0.B2290 0.79209 0.76290 0.73803 0.70843 0.6k301 0.85373 0.83552 0.61332 0.59206 0.57195 0.951,17 0.90573 0.86261 0.82193 0.78353 0.74726 0.71299 0.61358 081993 0.67192 0.5945 058743 0.51278051937 0.19718 091205 0.8879 083748 0.79031 0.7 1622 0.70496 666 0.69017 05962 0.56117 053461 50663 0.18032 045559 043233 0.93272 0.87056 0.81309 0.75992 071068 0.66506 062275 0.56349 0 51703 0.51316 048166 045235 0.12.506 0.39964 0.37594 11.02748 185340 11.75041 0.7306 116768 0.62741 11.58201 0.54027 Smist 0.16651 043.993 11.40365 0.37616 nasms 0.328on 11.91494 11.63476 11.76042 0.701299 1164461 0.59190 11.54373 0.5002. 11.461143 0.43410 OW092 1.81161 0.2729802307.91 0.28420 11.9052 20:25 1.74409 0.07550 1.01391 0.3 1.50435 0.4619 0.42241 0.38354 055211 052197 0.29459 0.20474 0.24718 1.1962 0.60428 0.72242 0.64956 0.58406 0.32879 0.47509 0.42808 038733 0.11049 031726 0.26748 0.26070 0.25662 0.21494 0.88:45 0.78049 0.70138 0.62480 0.55684 0.49897 0.44401 0.39711035553 0.31663 0.28584 025668 0.23071 0.20756 0.18891 0.67666 0.77303 0.6B093 0.6005 0.53032 0.16B61 0.41198 0.38770 032616 0.2956 025751 022917 0.20415 0.18207 0.16253 0.86996 0.75788 066112 0.57718 0505070.14230 038782 0.34016 029925 0.28333 023199 020 162 0.18068 0.15971 0.1.1133 0 61350 1130106186055526048102 11727 036245 0.31521 027154 0.29939 020900018270 015989 014010 0127.89 085282 0.72845 0.62317 0.53391 0.15811 0.19365 033873 0.29189 0.25187 0.21763 0.18629 0.16312 0.14150 0.12.250 0.10686 11.44428 1171416 .GOSUZ 0.51337 11.4360 0.371.36 1.316.5T 0.27027 0.23107 0.19784 0.1693 0.14554 0.12.522 0.1070 0.09293 II. KY612 1.711116 11.567.39 0.4% 1141552 0.31.50.34 11.24586 0.2.9025 0.21199 0.17986 0.152X2 11.1:51104 11.11081 11.094.56 0.0180K1 LI. K2574 11.88645 1.57028 0.47464 50575 0.9051 1.276.51 0.2151 0.19449 0.16351 0.13705 0.11611 0.00 0.05293 0.07017 U.61954 0.87297 0.33368 0.45039 037689 0.31100 0.25842 0.21453 0.17543 0.14864 0.12405 0.10307 0.08096 .07276 0.00110 ACT 1X611 Page 5 Table B Present value interest factor of an (ordinary) annuity of Sl per period at i for n periods (PVIFA1,n) (PVIFA...) = (1+1) Period 1% 2% 3% 4% 59% 89% 8% 9% 10% 11% 12% 13% 14% 15% 0.99010 0.98039 0.970B 0.98154 0.95238 0.9 140 0.93158 0.92593 0.91743 0.90909 0.90090 0.89286 0.68198 0.87719 0.86957 1.97010 1.91156 1.91347 1.88609 1.89911 1.83339 1.70809 1.78326 1.75911 1.93554 1.71252 1.69005 166810 1.61666 1.62571 2.94099 2,88388 2.82861 2.77509 2.72323 2.67201 262132 2.57710 2.53129 24868 2.1-371 2.10183 2.36115 2.32163 2.28323 2.90197 3.807733.1710 3.62990 3.54505 3.16511 338721 3.31213 3.29972 3.16967 3.10243 3.09735 2.9744: 2.91371 2.85498 4.85:43 4.71.346 4.57971 4.45182 4.32045 4.21230 4.100 3.00271 3.88965 3. Ton70 3.60.500 3.60478 2.517232.43.18 3.85216 5.7954% 5.00143 5.41719 5.24214 5.075694.91 4.766.54 4.62.288 4.44.592 4.15505 4.2:5054 4.11141 1.997.55 2. 367 3.78448 6.72819 0.47109 0.28028 0.0020.3 5.76037 55808 358029 5.20037 5.09195 4.10842 4.71220 4.36.36 4.42201 4.260 4.16042 7.05168 22548 7.01989 6.73274 0.48521 0.20979 3.971390 5.74864 5.53462 353494 5.14512 4.06764 4.087 4.63880 4.48732 8.38002 C.16224 9.76811 5.43333 2.10:52 S.C0189 6.51523 3.24889 5.99525 5.25902 5.3370: 5.32625 5.13168 4.94637 4.77156 9.47130 8.98259 8.53020 B.11090 7.72173 36009 7.02358 .71008 .41766 6.14157 5.81923 5.65022 3.42624 5.21612 5.01B?? 10.25763 9.78685 9.25262 8.760 18 8.4611 7.88687 7.198677.13896 6.80519 6.9566 6.27652 5.93770 588691 3.152735.23371 11 25508 10.57531905100938507 8.88523838161 704260733608 716073 6.81369 6.19236 6.19437 591765 5.66029 S.12062 12.13374 11.31837 10.63199 9.985659.39357 8.85368 83576590378 TA8600 7.10236 6.74987 6.12355 6.121815.84236 5.58315 12.00370 12.10625 11.2960 10.56.212 9.89864 0.29408 8.545478.24424 T.78615 7.1igo 6.981876.62817 6.30240 6.0020? 5.72448 12.26511.5 12.84924 11.94794 11.118.99 10.379669.71 225 .10791 4.55948 .1606U 7.LOGOS 1.190876.81086 6.462:8 6.14217 5.847.17 14.71787 15.57771 12.56110 11.052.30 10.5777 10.103911 19.4460 6.65137 6:31 256 7.92371 .37916 6.07:599 6.00 6.2506 5.05423 13.38223 14.29187 13.10612 12.18567 11.27407 10.47726 9.583239.12164 6.543 8.021.337.34679 7.11963 6.2009 0.37286 8.04716 16.19827 14.99203 13.5351 12.65930 11.61959 10.02780 10.05909 9.2.189 0.335838.20141 7.80162 .2496 6.63991 6.48742 3.12797 17.22601 15.6.816 11.323B0 13.13394 12.0ES32 11.15 B12 1033580 9.60360 3.95011 838192 7.83929 3.36576 6.9379; 6.55037 S.19B23 2 1 8.6555 18.35113 11.87747 13.59033 12.16221 11.16992 10.59101 9.81B15 9.12855 3.51356 7.96333 7.46911702175 6.62313 6.25933 ACT 1X611 Page 6