1. What factors should be considered in determining the issue price of a debenture.
2. On 1 July 2018 Bombo Ltd issues $2 million in six-year debentures that pay interest each six months at a coupon rate of 8 per cent. At the time of issuing the securities, the market requires a rate of return of 6 per cent. Interest expense is determined using the effective-interest method. Required:
3. Determine the issue price of the debenture.
4. Provide the journal entries at: 1 July 2018, 30 June 2019, & 30 June 2020.