On January 1, 2019, Concord issued 10-year, $300,000 face value, 6% bonds at par. Each $1,000...
On January 1, 2019, Concord issued 10-year, $300,000 face value, 6% bonds at par. Each $1,000 bond is convertible into 30 shares of Concord $2 par value common stock. The company has had 10,000 shares of common stock (and no preferred stock) outstanding throughout its life. None of the bonds have been converted as of the end of 2020. (Ignore all tax effects.)
a. Prepare the journal entry Concord would have made on January 1, 2019, to record the issuance of the bonds.
| Jan. 31, 2019 |
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b. Concord’s net income in 2020 was $34,000 and was $32,000 in 2019. Compute basic and diluted earnings per share for Concord for 2020 and 2019.
| 2020 | 2019 | |||
| Basic earning per share | $
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$
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| Diluted earning per share | $
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$
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c. Assume that 75% of the holders of Concord’s convertible bonds convert their bonds to stock on June 30, 2021, when Concord’s stock is trading at $32 per share. Concord pays $50 per bond to induce bondholders to convert. Prepare the journal entry to record the conversion.
| Jun. 30, 2021 |
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