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Prepare the journal entries in respect of the debentures

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Reference no: EM133170519

Question - Hans Ltd issued 12% R200 000 debentures at 95% of the par value on 1 January 2015. Interest is payable annually on 31 December.  The debentures are redeemable at par value over a four year period starting from 31 December 2015. The company's financial year end is 31 December. Similar instruments were trading at 14.6032%. The following schedule is provided to you:

Opening balance

Cash flow

Interest

Balance Outstanding

  1 January 2015


190 000

31 December 2015

190 000

(74 000)

27 746

143 746

31 December 2016

143 746

(68 000)

20 992

96 738

31 December 2017

96 738

(62 000)

14 127

48 864

31 December 2018

48 864

(56 000)

7 136

-

Required - Prepare the journal entries in respect of the debentures for Hans Ltd for the years ended 31 December 2015 and 2016.

Reference no: EM133170519

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