Fitch Limited issued 1000, 5% secured debentures of R1000 face value at 96% of facevalue on 1 January 2018. On that date, the finance director determined effective interestrate 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 ofeach year starting on 31 December 2020. Debentures redeemed can notexceed 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 atany time and cancel them. If it does so, the debentures to be redeemed (inaccordance to (i)) at the end of the year in which they are purchased are to bereduced by the nominal value of the debentures purchased.ii.ii.You are informed that, on 30 June 2020, the company purchased 150 of 5% secureddebentures at 98% of the face value.(b) Record all the relevant transactions, including cash and interest transactions, inthe General Journal of the company for the years ended 31December 2018, 2019and 2020.

The debentures when issued at price lower than face value are said to be issued at discount. The…

Answered: Fitch Limited issued 1000, 5% secured…

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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On January 1, 2021, Jackie Company issued 2,000 P5,000 8% five-year bonds at 90.35 when the market rate is 11%. Interest is payable every January 1 and July 1 starting 2021. 1. How much is the discount amortization during 2024?2. How much is the unamortized discount as of July 1, 2025?
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as
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