Question

E15-5

Swisher Company issued $2,000,000 of bonds on January 1, 2017. E15-5 Prepare entries for issuance, redemption, and conversion of bonds Instructions re the journal entry to record the issuance of the bonds if they are issued at (1o 2) e the journal entry to record the redemption of the bonds at maturity, assuming ord the redemption of the bonds before maturity at 98. d Prepare the journal entry to record the conversion of the bonds into 60,000 shares of (1) 100, (2) 98, and (3) 103. the bonds were issued at 100. Assume the balance in Premium on Bonds Payable is $9,000. $10 par value common stock. Assume the bonds were issued at par b) Prepar

Answer 1

A.

1.	Cash Dr.	$2,000,000
	Bonds payable Cr.		$2,000,000
	(Issue of bond at 100)
2.	Cash Dr.	$1,960,000
	Discount on bonds payable Dr.	$40,000
	Bonds payable Cr.		$2,000,000
	(Issue of bond at 98)
3.	Cash Dr.	$2,060,000
	Bonds payable Cr.		$2,000,000
	Premium on bonds payable Cr. (Issue of bond at 103)		$60,000

B.

Bonds payable Dr.	$2,000,000
Cash Cr. (Redemption of bonds at maturity)		$2,000,000

C.

Bonds payable Dr.	$2,000,000
Premium on bonds payable Dr.	$9,000
Cash Cr		$1,960,000
Gain on redemption of bonds Cr. (Redemption of bonds before maturity)		$49,000

D.

Bonds payable Dr.	$2,000,000
Common stock Cr.		$600,000
APIC Cr. (Conversion of bonds)		$1,400,000

Working Notes

Dr. Means Debit

Cr. Means Credit