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You are the senior accountant at LMNOP accounting and are looking at the financial information

of a new client, Fit Vents. Fit Vents is a local Kamloops company that sells a patented, quick

install ceiling vent. They are growing quickly.

You have just finished your initial meeting with one of the owners, Matt Rodrigue, and he has

supplied you with various accounting issues they have encountered. Up to now, the owners

have done the accounting for the company, but there are several transactions that they need

your help.

The following pages $($appendix$)$ have the different situations that require your attention.

Required:

Treat each appendix separately and answer Matt$$s questions.Appendix $1$

During the current year we've issued several different bonds and a note. We are also debating

on issuing some other bonds next year. Here are the details:

We are thinking about issuing a $5$ year, $5\%,$$$1,000$ bond next year that will have a total

value of $$2,000,000.$ Interest will be paid once per year. This will help with expansion.

Similar bonds are being sold for $8\%.$ How much cash can we expect to receive from the

bond and what is the journal entry?

On April $30$th of this year we issued a $2-$year non$-$interest$-$bearing note in return for

equipment. The maturity value of the note is $$699,999.$ We would normally pay interest

of $10\%$ per year on this type of debt. To be sure I did it right, what is the journal entry I

should post? Our Year end is December $31,$ do I need to do anything at this point too?

We had a bond ready to be issued at December $31,$ of this year. The $10$ year $$2,000,000$

of bonds pay interest of $4\%$ once per year on December $31.$ Due to an underwriting

delay, the bonds won't be issued until March $31,$ of next year at a market rate of $4\mathrm{.}6\%.$

How would I record the bond payable amount at the issuance date? What about the

interest payment date next December ${31}^{st}?$ What if we retired the bond the next day for

$$2,100,000?$

This is a personal question I$\text{'}$m hoping you can answer $-$ for my own learning! On January

$1$ of this year, my sisters company, Noskova Ltd$.$ owed the Cox Corp. for a $$425,000$ note

payable, plus accrued interest of $$40,000.$ Noskova is now in financial difficulty and

cannot repay Cox. To settle the debt, Cox agrees to accept from my sisters company

some equipment with a fair value of $$340,000,$ an original cost of $$520,000,$ and

accumulated depreciation to date of $$220,000.$ I prepared the following journal entries

for each company, did I do it right?

Noskova Ltd

Cox Corp

At the start of the year we offered a convertible bond to some potential investors. The

bond was a $10$ year, $10\%,$$$1,000$ convertible bond. $1,000$ bonds were issued at par.

Each bond can be converted to $500$ common shares. These shares are estimated to be

worth $$10/$ share. Bonds in the market without conversion features are trading at $12\%.$

What would be the journal entry to record the issuance of the bond? We use IFRS

What would be the journal entry if the bond holders decide to convert the shares at the

end of year $2?$

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