Question

Part 2: Issuance of Securities

The following announcement appeared in the May 15, 2017, issue of the Wall Avenue Financial Journal:

_________________________________________________________________________

This announcement is not an offer of securities for sale or an offer to buy securities.

New Issue, May 15, 2017                                                                          $950,000,00

                                                 CRUDE OIL& GAS, INC.

                                          6.25% Debentures Due July 1, 2032

                                                          Price 103.35%

                             Plus accrued interest if any from the date of issuance

Copies of the prospectus and the related prospectus supplement may be obtained from such
of the undersigned as may legally offer these securities under applicable securities laws.

             Kermit Jeffers & Co. Inc. / Banks Bros. & Co. \ William Stork & Co.

Address the following:

Describe the entry to record the sale of a security and its impact on future interest expense.

Answer 1

PART 1
	Date	Particulars	Debit	Credit
			$	$
	May-15	Bank A/c                                                                       Dr.	98930788
		To Debenture Application A/c		98930788
		(Being Application money Received)
	May-15	Debenture Application A/c	98930788
		To 6.25% Debentures		95000000
		To Securities Premium		3182500
		To Interest Due A/c (See Note)		748288
		(Being Debentures issued)
	Working Note:
	1	Interest due	95000000*6.25/100*46/365
			748288
	2	Amount Received by the Company
		Debentures= 95000000
		Security Premium = 95000000*3.35/100= 3182500
		interest due = 748288
		total	98930788
PART 2	Impact on Future Interest
	Interest expense will be $5937500 every year (95000000*6.25/100)