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Calculate the interest expense for the year ended june

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Reference no: EM132525120

The following information relates to a debentures issue of Justice Ltd dated 1 January 2019.

The company's financial year-end is 30 June

Question (a) Make general journal entries to record:

i. the issue of the debentures

ii. the 30 June and 31 December 2019 interest payments

iii. the 30 June 2020 interest payment.

Question (b) Calculate the interest expense for the year ended 30 June 2020, and prepare the entry to close the Interest Expense account to the Profit or Loss Summary account.

Question (c) Show how the debentures will be reported at 30 June 2020.

Date issued                                   1 January 2019
Nominal value                                   $1000
Stated interest rate                               8%
Interest payment dates                   30 June and 31 December
Term to maturity                              8 years
Cash received from the issue              $500 000

Reference no: EM132525120

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