Calculate the interest expense for each of the three years

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Question - On 1 July 2018 Super Ltd issues $50 million of bonds to tubes Ltd. The bonds have a life of three years, a face value of $10 00 each, and they offer interest, payable at the end of each financial year, at a rate of 8 per cent per annum

The market requires a rate of return of 10 per cent per annum on such securities, and hence the bonds were sold for $47,512,600

REQUIRED -

Calculate the interest expense for each of the three years (Show calculations).

Journalize the issue of the above bonds.

Journalize the payment of the first year's interest.

On maturity of the bonds, the Company paid the bonds by issuing shares of the required amount. Journalize this transaction.

Reference no: EM133057426

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