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a) Identify five differences between ordinary shares and debentures. (b) On 1 July 2018 Maleka Ltd issues $6 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 investors required rate of return was 6 per cent. Interest expense is determined using the effective-interest method. REQUIRED (i) Determine the issue price of the debenture (ii) Will the debenture be issued at premium or discount? Why? (iii) Provide the journal entries at: 1 July 2018, 30 June 2019, & 30 June 2020.

a) Identify five differences between ordinary shares and debentures. (b) On 1 July 2018 Maleka Ltd issues $6 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 investors required rate of return was 6 per cent. Interest expense is determined using the effective-interest method. REQUIRED (i) Determine the issue price of the debenture (ii) Will the debenture be issued at premium or discount? Why? (iii) Provide the journal entries at: 1 July 2018, 30 June 2019, & 30 June 2020.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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a) Identify five differences between ordinary shares and debentures.
(b) On 1 July 2018 Maleka Ltd issues $6 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 investors required rate of return was 6 per cent. Interest expense is determined using the effective-interest method.
REQUIRED
(i) Determine the issue price of the debenture
(ii) Will the debenture be issued at premium or discount? Why?
(iii) Provide the journal entries at:
1 July 2018, 30 June 2019, & 30 June 2020.

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