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Question 3 Western World Inc. issues $30,000,000 of convertible bonds with each $1,000 bond convertible into...

Question 3

Western World Inc. issues $30,000,000 of convertible bonds with each $1,000 bond convertible into 15 shares of the company’s $1 par common stock. The bonds are issued at 103 on January 1, 2020 and pay interest in Jan and July and mature on January 1, 2025.   

On July 1, 2021, 40% of the bonds are converted when the stock price is $80 per share and 30% of the bond premium has been amortized. Record the following transactions:

  • Bond as issuance

  • Conversion of $30,000,000 in bonds to common stock.

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solution Journal enterez bate Particulars Delit Coredet 1-1-2020 30900000 900000 Cash ( 30000000X 1.03] prenium on bonds paya

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