On 1 July 2016, Beech Ltd issued a prospectus inviting applications for 1000 7.5
ID: 2464157 • Letter: O
Question
On 1 July 2016, Beech Ltd issued a prospectus inviting applications for 1000 7.5% unsecured notes of $200 each, payable in full on application. By 31 August, the company received applications for 920 of the notes and they were subsequently allotted. The notes were classified as a liability in the financial statements.
On 30 June 2019, the company decided to redeem the notes in cash on the open market, at a premium of $4 per note.
Required
Ignoring interest, prepare the ledger accounts to record the above transactions.
Explanation / Answer
BEECH LTD
A.
Cash Trust
31/8/16
Application – Notes
184 000
31/8/16
Cash
184 000
Cash (extract)
31/8/16
Cash Trust
184 000
30/6/19
Unsecured notes and redemption expense
187 680
Application - Notes
31/8/16
Unsecured Notes
184 000
31/8/16
Cash Trust
184 000
Unsecured Notes
30/6/19
Cash
184 000
31/8/16
Application
184 000
Expense on Redemption
30/6/19
Cash
3 680
Cash Trust
31/8/16
Application – Notes
184 000
31/8/16
Cash
184 000
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