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Determine the issue price

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Question - On 1 July 2018 Michaela Ltd issues $4,000,000 in five-year debentures that pay interest each six months at a coupon rate of 10 per cent. At the time of issuing the securities, the market requires a rate of return of 8 per cent. Interest expense is determined using the effective-interest method.

REQUIRED - (a) Determine the issue price. (b) Provide the journal entries at: (i) 1 July 2018 (ii) 30 June 2019 (iii) 30 June 2020.

Reference no: EM132646326

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