Question

On January 1, 2018, Gless Textiles issued $12 million of 9%, 10-year convertible bonds at 101. The bonds pay interest on June 30 and December 31. Each $1,000 bond is convertible into 40 shares of Gless's no par common stock. Bonds that are similar in all respects, except that they are nonconvertible, currently are selling at 99 (that is, 99% of face amount). Century Services purchased 10% of the issue as an investment. Required: 1. Prepare the journal entries for the issuance of the bonds by Gless and the purchase of the bond investment by Century. 2. Prepare the journal entries for the June 30, 2022, interest payment by both Gless and Century assuming both use the straight-line method. 3. On July 1, 2023, when Gless's common stock had a market price of $33 per share, Century converted the bonds it held. Prepare the journal entries by both Gless and Century for the conversion of the bonds (book value method). Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare the journal entries for the issuance of the bonds by Gless and the purchase of the bond investment by Century. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.) View transaction list Journal entry worksheet

Answer 1

0 Required - Date 1 Jan 2018 - Particulars Credit Cash Debit 13,080,000 To Convertible bonds Payable To bremium on bonds. 12,000,000 payable 1,08 opoo - 1 Jan 2018 Investment in convertible Bonds bremum on bond Investment To cash 12,00.000 108,000 1,308,000

Required - June 30 2029 Interest Premium To expense son bonds Cash 491,400 48,600 payable 540,000 June 30 2022 54,000 Cash To bemim on bond investment To interest Revenue 4,860 49, 140