Homework Due Week 3

ACC3601 Corporate Accounting and Reporting

On August 10th 2016 (beginning of day), HDB issued notes with a maturity of August 10 2023 (beginning
of day) and a face value of S$700,000,000. The notes have a coupon rate of 1.91% p.a. with semi-annual
coupons payable in arrears (at the end of each semi-annual period following the issue).
Assume that the note issue attracted an effective interest rate (APR) of 3.3% p.a.1
Required:
1. Calculate the proceeds and state the initial premium or discount on the note.
2. Prepare the initial journal entries to record the note issue.
3. Prepare an interest payment schedule over the life of the notes.
4. HDB has a balance-sheet date of March 31st. Show the entries relating to the notes in the
financial year ending March 31st 2017 (no need to repeat the entries shown in 1).
5. Show the balance-sheet presentation of the notes as of March 31st 2017 (follow lecture note).
6. Show the entries relating to the notes in the financial year ending March 31st 2018.
7. Show the balance-sheet presentation of the notes as of March 31st 2018 (follow lecture note).

This is just a hypothetical assumption. The actual effective interest rate may be different.