Vaughn Inc. issued $2,880,000 of convertible 10-year bonds on
July 1, 2020. The bonds provide for 12% interest payable
semiannually on January 1 and July 1. The discount in connection
with the issue was $50,400, which is being amortized monthly on a
straight-line basis.
The bonds are convertible after one year into 8 shares of Vaughn
Inc.’s $100 par value common stock for each $1,000 of bonds.
On August 1, 2021, $288,000 of bonds were turned in for conversion
into common stock. Interest has been accrued monthly and paid as
due. At the time of conversion, any accrued interest on bonds being
converted is paid in cash.
Prepare the journal entries to record the conversion, amortization,
and interest in connection with the bonds as of the following
dates. (Credit account titles are automatically
indented when amount is entered. Do not indent manually. If no
entry is required, select "No Entry" for the account titles and
enter 0 for the amounts.)
(a) | August 1, 2021. (Assume the book value method is used.) | |
(b) | August 31, 2021. | |
(c) | December 31, 2021, including closing entries for end-of-year. |
Preparation of the journal entries to record the conversion, amortization, and interest in connection with the bonds as of the following dates. Refer the below images for more detailed solution with calculations.
Vaughn Inc. issued $2,880,000 of convertible 10-year bonds on July 1, 2020. The bonds provide for...
Oriole Inc. issued $2,940,000 of convertible 10-year bonds on July 1, 2020. The bonds provide for 13% interest payable semiannually on January 1 and July 1. The discount in connection with the issue was $52,800, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 8 shares of Oriole Inc.’s $100 par value common stock for each $1,000 of bonds. On August 1, 2021, $294,000 of bonds were turned in for conversion into...
Martinez Inc. issued $1,800,000 of convertible 10-year bonds on July 1, 2020. The bonds provide for 12% interest payable semiannually on January 1 and July 1. The discount in connection with the issue was $48,000, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 8 shares of Martinez Inc.’s $100 par value common stock for each $1,000 of bonds. On August 1, 2021, $180,000 of bonds were turned in for conversion into...
Monty Inc. issued $3,240,000 of convertible 10-year bonds on July 1, 2020. The bonds provide for 12% interest payable semiannually on January 1 and July 1. The discount in connection with the issue was $57,600, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 8 shares of Monty Inc.’s $100 par value common stock for each $1,000 of bonds. On August 1, 2021, $324,000 of bonds were turned in for conversion into...
Martinez Inc. issued $1,800,000 of convertible 10-year bonds on July 1, 2020. The bonds provide for 12% interest payable semiannually on January 1 and July 1. The discount in connection with the issue was $48,000, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 8 shares of Martinez Inc.’s $100 par value common stock for each $1,000 of bonds. On August 1, 2021, $180,000 of bonds were turned in for conversion into...
Carla Inc. issued $2,820,000 of convertible 10-year bonds on July 1, 2020. The bonds provide for 11% interest payable semiannually on January 1 and July 1. The discount in connection with the issue was $51,600, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 8 shares of Carla Inc.s $100 par value common stock for each $1,000 of bonds. On August 1, 2021, $282,000 of bonds were turned in for conversion into...
Shamrock Inc. issued $3,180,000 of convertible 10-year bonds on July 1, 2020. The bonds provide for 13% interest payable semiannually on January 1 and July 1. The discount in connection with the issue was $54,000, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 8 shares of Shamrock Inc.'s $100 par value common stock for each $1,000 of bonds. On August 1, 2021, $318,000 of bonds were turned in for conversion into...
Problem 16-02 Pina Inc. issued $2,400,000 of convertible 10-year bonds on July 1, 2020. The bonds provide for 12% interest payable semiannually on January 1 and July 1. The discount in connection with the issue was $56,400, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 8 shares of Pina Inc.'s $100 par value common stock for each $1,000 of bonds. On August 1, 2021, $240,000 of bonds were turned in for...
Problem 16-02 Concord Inc. issued $2,400,000 of convertible 10-year bonds on July 1, 2020. The bonds provide for 12% interest payable semiannually on January 1 and July 1. The discount in connection with the issue was $56,400, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 8 shares of Concord Inc.’s $100 par value common stock for each $1,000 of bonds. On August 1, 2021, $240,000 of bonds were turned in for...
Oriole Inc. issued $3,120,000 of convertible 10-year bonds on July 1, 2017. The bonds provide for 12% interest payable semiannually on January 1 and July 1. The discount in connection with the issue was $49,200, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 8 shares of Oriole Inc.’s $100 par value common stock for each $1,000 of bonds. On August 1, 2018, $312,000 of bonds were turned in for conversion into...
Question 3 View Policies Current Attempt in Progress Blossom Inc. issued $2,700,000 of convertible 10-year bonds on July 1, 2020. The bonds provide for 12% interest payable semiannually on January 1 and July 1. The discount in connection with the issue was $52,800, which is being amortized monthly on a straight-line basis. The bonds are convertible after one year into 8 shares of Blossom Inc's $100 par value common stock for each $1,000 of bonds. On August 1, 2021, $270,000...