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Sky Ltd is a construction company. Sky Ltd plans to build a
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Sky Ltd is a construction company. Sky Ltd plans to build a shopping complex, and in order to raise money, Sky Ltd issued debentures.

On 1 January 2009 Sky Ltd issued 10 000 $200 8% debentures. The debentures were issued at a discount price of $160. The debentures will be redeemed at par on 31 December 2013.

The effective interest rate on debentures is 13.79732% p.a.

The year-end of Sky Ltd is 31 December.

Required:

  • Provide the journal entries to record this transaction in the books of Sky Ltd for the financial years ended 31 December 2009 and 31 December 2010. Narrations are required.
  • Provide disclosure in the statement of financial position and statement of comprehensive income of Sky Ltd for the financial year ended 31 December 2009 and 31 December 2010.         

Date

 

Title of account

 

12/31/2009 Interest Expense

 

Discount on Bonds

 

Cash

 

To record interest expense

 

for the year

 


 

Debit

 

$

 


 

12/31/2010 Interest Expense

 

Discount on Bonds

 

Cash

 


 

$

 


 

Credit

 

220,757

 

$

 

$...

 







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