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Determine issue price

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Question - On 1 July 2014 Michaela Ltda Ltd issues $2 million in five-year debentures that pay interest each six months at a coupon rate of 20 per cent. At the time of issuing the securities, the market requires a rate of return of 16 per cent. Interest expense is determined using the effective-interest method.

A) Determine issue price.

B) Provide journal entries at: I) 1 July 2014. II) 30 June 2015. III) 30 June 2016.

Reference no: EM132615248

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