QUESTION 1 [20] Sojourn Limited issued 75 000 debentures on 1 January 2019 at their...
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Accounting
QUESTION 1 [20]
Sojourn Limited issued 75 000 debentures on 1 January 2019 at their face value of R7 each which was their fair value on issue date. The debentures offered interest based on a coupon rate of 10%. The following additional information is available. The debenture holder has the option to convert the debentures on 31 December 2021 into 750 ordinary shares. If they are not converted, they will be redeemed on this date at R7 each. The market interest rate for similar debt but without the option to convert is 15%. The debentures are not held for trading.
REQUIRED: Prepare the journal entry to record transaction as at the 1 January 2019. Please show all workings.
Marks will be allocated for workings. Journal entry must include narration.
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