Tofino Trading Limited (TTL), an IFRS reporting company with a December 31 year end, wants to raise capital on the bond market. TTL had the securities lawyers write up a debenture bond issue for 10 years at a face value of $12,000,000 and a coupon rate of 4%. The bond issue was dated and ready to take to market on September 1, 2018 with semi-annual interest payments (September 1 & March 1).

The underwriters, monitoring the market interest rates, convinced TTL to wait and the bond was actually taken to market on November 1, 2018 for bond proceeds only of $13,015,269 (this is given; does not have to be proved), reflecting a yield rate of 3%. The Bank of Canada rate at the date of issue was 1.5%.

TTL applies a separate bond discount or premium account, as required. (Hint: Apply a time line to plot the events, contemplate the entry descriptions and ensue accurate n before proceeding with detailed calculations.)

In presenting entries, round all calculations throughout this assignment to the nearest dollar (no cents).

Part I Required:

Prepare entries, with supporting calculations, at the following dates:

1. Date of bond issue.

2. December 31, 2018, the financial year end. Hint: calculate the carrying value at March 1, 2019 and prorate the amortization from the date of issue to determine the interest expense for 2 months.

3. March 1, 2019