Buderup Plc issues £9 million in 12-year,6%,semi-annual coupon debentures.The rate of return required by the market is 10% per annum.What are the journal entries to record the first and second payments of interest assuming that Buderup uses the effective-interest method to amortise any discount or premium (rounded to the nearest pound)?
A) (a) First interest payment

\begin{array}{|l|l|r|r|}\hline \mathrm{Dr} & \text { Interest expense } & 233451 & \\\hline \mathrm{Dr} & \text { Debentures } & 36549 & \\\hline \mathrm{Cr} & \text { Cash } & & 270000 \\\hline\end{array}

(b) Second interest payment

\begin{array}{|l|l|r|r|}\hline \mathrm{Dr} & \text { Interest expense } & 211397 & \\\hline \mathrm{Dr} & \text { Debentures } & 58603 & \\\hline \mathrm{Cr} & \text { Cash } & & 270000 \\\hline\end{array}

B) (a) First interest payment

\begin{array}{|l|l|r|r|}\hline \mathrm{Dr} & \text { Interest expense } & 270000 & \\\hline \mathrm{Dr} & \text { Debentures } & 36549 & \\\hline \mathrm{Cr} & \text { Cash } & & 306549 \\\hline\end{array}

(b) Second interest payment

\begin{array}{|l|l|r|r|}\hline \mathrm{Dr} & \text { Interest expense } & 270000 & \\\hline \mathrm{Dr} & \text { Debentures } & 249898 & \\\hline \mathrm{Cr} & \text { Cash } & & 519898 \\\hline\end{array}

C) (a) First interest payment

\begin{array}{|r|l|r|r|}\hline \mathrm{Dr} & \text { Interest expense } & 325812 & \\\hline \mathrm{Cr} & \text { Debentures } & & 55812 \\\hline \mathrm{Cr} & \text { Cash } & & 270000 \\\hline & & & \\\hline\end{array}

(b) Second interest payment

\begin{array}{|l|l|r|r|}\hline \mathrm{Dr} & \text { Interest expense } & 328603 & \\\hline \mathrm{Cr} & \text { Debentures } & & 58603 \\\hline \mathrm{Cr} & \text { Cash } & & 270000 \\\hline\end{array}

D) (a) First interest payment

\begin{array}{|r|l|r|r|}\hline \mathrm{Dr} & \text { Interest expense } & 270000 & \\\hline \mathrm{Cr} & \text { Debentures } & & 27906 \\\hline \mathrm{Cr} & \text { Cash } & & 242094 \\\hline\end{array}

(b) Second interest payment

\begin{array}{|r|l|r|r|}\hline \mathrm{Dr} & \text { Interest expense } & 270000 & \\\hline \mathrm{Cr} & \text { Debentures } & & 29301 \\\hline \mathrm{Cr} & \text { Cash } & & 240699 \\\hline\end{array}

Convertible Notes Are

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