Fitch Limited issued 1000, 5% secured debentures of R1000 face value at 96% of face value on 1 January 2018. On that date, the finance director determined effective interest rate to be 5, 95807% The terms of issue include the following provisions: i. 200 of 5% secured debentures are to be redeemed at face value at the end of each year starting on 31 December 2020. Debentures redeemed can not exceed 200 debentures in any given year. Interest is payable on 31 December of each year. The company is empowered to purchase debentures on the open market at any time and cancel them. If it does so, the debentures to be redeemed (in accordance to (i)) at the end of the year in which they are purchased are to be reduced by the nominal value of the debentures purchased. ii. i. You are informed that, on 30 June 2020, the company purchased 150 of 5% secured debentures at 98% of the face value. (b) Record all the relevant transactions, including cash and interest transactions, in the General Journal of the company for the years ended 31December 2018, 2019 and 2020
Fitch Limited issued 1000, 5% secured debentures of R1000 face value at 96% of face value on 1 January 2018. On that date, the finance director determined effective interest rate to be 5, 95807% The terms of issue include the following provisions: i. 200 of 5% secured debentures are to be redeemed at face value at the end of each year starting on 31 December 2020. Debentures redeemed can not exceed 200 debentures in any given year. Interest is payable on 31 December of each year. The company is empowered to purchase debentures on the open market at any time and cancel them. If it does so, the debentures to be redeemed (in accordance to (i)) at the end of the year in which they are purchased are to be reduced by the nominal value of the debentures purchased. ii. i. You are informed that, on 30 June 2020, the company purchased 150 of 5% secured debentures at 98% of the face value. (b) Record all the relevant transactions, including cash and interest transactions, in the General Journal of the company for the years ended 31December 2018, 2019 and 2020
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 16E
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