Martinez Inc. issued $3,800,000 of 10%, 10-year convertible
bonds on June 1, 2020, at 98 plus accrued interest. The bonds were
dated April 1, 2020, with interest payable April 1 and October 1.
Bond discount is amortized semiannually on a straight-line
basis.
On April 1, 2021, $1,425,000 of these bonds were converted into
26,000 shares of $20 par value common stock. Accrued interest was
paid in cash at the time of conversion.
(a) | Prepare the entry to record the interest expense at October 1, 2020. Assume that accrued interest payable was credited when the bonds were issued. | |
(b) | Prepare the entry to record the conversion on April 1, 2021. (Book value method is used.) Assume that the entry to record amortization of the bond discount and interest payment has been made. |
Martinez Inc. issued $3,800,000 of 10%, 10-year convertible bonds on June 1, 2020, at 98 plus...
Sage Inc. issued $3,670,000 of 10%, 10-year convertible bonds on June 1, 2020, at 98 plus accrued interest. The bonds were dated April 1, 2020, with interest payable April 1 and October 1. Bond discount is amortized semiannually on a straight-line basis. On April 1, 2021, $1,376,250 of these bonds were converted into 36,000 shares of $20 par value common stock. Accrued interest was paid in cash at the time of conversion. (a) Prepare the entry to record the interest...
Sheffield Inc. issued $4,320,000 of 9%, 10-year convertible bonds on June 1, 2020, at 99 plus accrued interest. The bonds were dated April 1, 2020, with interest payable April 1 and October 1. Bond discount is amortized semiannually on a straight-line basis. On April 1, 2021, $1,620,000 of these bonds were converted into 25,000 shares of $20 par value common stock. Accrued interest was paid in cash at the time of conversion. (a) Prepare the entry to record the interest...
Oriole Inc. issued $3,940,000 of 9%, 10-year convertible bonds on June 1, 2020, at 98 plus accrued interest. The bonds were dated April 1, 2020, with interest payable April 1 and October 1. Bond discount is amortized semiannually on a straight-line basis. On April 1, 2021, $1,477,500 of these bonds were converted into 28,000 shares of $20 par value common stock. Accrued interest was paid in cash at the time of conversion. (a) Prepare the entry to record the interest...
Buffalo Inc. issued $3,840,000 of 10%, 10-year convertible bonds on June 1, 2020, at 98 plus accrued interest. The bonds were dated April 1, 2020, with interest payable April 1 and October 1. Bond discount is amortized semiannually on a straight-line basis. On April 1, 2021, $1,440,000 of these bonds were converted into 24,000 shares of $21 par value common stock. Accrued interest was paid in cash at the time of conversion. (a) Prepare the entry to record the interest...
Martinez Inc. issued $4,320,000 of 9%, 10-year convertible bonds on June 1, 2020, at 99 plus accrued interest. The bonds were dated April 1, 2020, with interest payable April 1 and October 1. Bond discount is amortized semiannually on a straight-line basis. On April 1, 2021, $1,620,000 of these bonds were converted into 25,000 shares of $20 par value common stock. Accrued interest was paid in cash at the time of conversion. (a) Prepare the entry to record the interest...
Indigo Inc. issued $3,900,000 of 11%, 10-year convertible bonds on June 1, 2017, at 97 plus accrued interest. The bonds were dated April 1, 2017, with interest payable April 1 and October 1. Bond discount is amortized semiannually on a straight-line basis. On April 1, 2018, $1,462,500 of these bonds were converted into 26,000 shares of $19 par value common stock. Accrued interest was paid in cash at the time of conversion. (a) Prepare the entry to record the interest...
Sunland Inc. issued $6 million of 10-year, 10% convertible bonds on June 1, 2020, at 96 plus accrued interest. The bonds were dated April 1, 2020, with interest payable April 1 and October 1. Bond discount is amortized semi-annually. Bonds without conversion privileges would have sold at 95 plus accrued interest. On April 1, 2021, $1.50 million of these bonds were converted into 30,000 common shares. Accrued interest was paid in cash at the time of conversion. Assume that the...
Wildhorse Inc. issued $7.0 million of 10-year, 9%, convertible bonds on June 1, 2017 at 98 plus accrued interest. The bonds were dated April 1, 2017, with interest payable April 1 and October 1. Bond discount is amortized semi-annually. Bonds without conversion privileges would have sold at 97 plus accrued interest. On April 1, 2018, $1.75 million of these bonds were converted into 35,000 common shares. Accrued interest was paid in cash at the time of conversion but only to...
Exercise 16-2 Skysong Inc. issued $4,320,000 of 9%, 10-year convertible bonds on June 1, 2017, at 99 plus accrued interest. The bonds were dated April 1, 2017, with interest payable April 1 and October 1. Bond discount is amortized semiannually on a straight-line basis. On April 1, 2018, $1,620,000 of these bonds were converted into 25,000 shares of $20 par value common stock. Accrued interest was paid in cash at the time of conversion. (a) Prepare the entry to record...
ABC Inc issued $6 million of 10-year, 9% convertible bonds on June 1, 2018. These bonds were issued at 98 plus accrued interest. The bonds were dated April 1, 2018, with interest payable April 1 and October 1. Bond discount is amortized semi-annually. Similar bonds without the conversion privileges would have sold at 97 plus accrued interest. On April 1, 2018, $1.5 million of these bonds were converted into 30,000 common shares. Accrued interest was paid in cash at the...