Prepare shen ltd two required adjusting journal entries

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On 1 April 2018, Shen Ltd acquired specialised equipment by issuing $2,700,000 of face value, 9% ten-year bonds to the equipment's manufacturer. No cash changed hands. The bonds will pay interest semi-annually, beginning with the first payment due on 1 October 2018. The market interest rate on the issue date was 10%. The equipment, which was available for use immediately, will be depreciated under the declining balance method at 30%. The estimated residual value is $200,000. Ignore GST. Round to two decimal places.

Required:

Question 1: Prepare the journal entry for equipment purchase/bond issuance on 1 April 2018.

Question 2: Shen Ltd adjusts and closes its books annually on 31 July. Prepare Shen Ltd's two required adjusting journal entries on that date. For depreciation purposes, you may use a cost figure of $2,500,000

Reference no: EM132698101

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