On 1 July 2007 Michael Ltd issued $1 million in five-year debentures that pay interest every six months at a coupon rate of 10 percent. At the time of issuing the securities, the market required a rate of return of 8 percent. Any discount or premium on issue is amortised using the effective interest method.
Required.
a) Determine the issue price.
b) Provide journal entries at:
i) 1 July 2007
ii) 30 June 2008
iii) 30 June 2009