Question

On January 1, 2021, 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, 2025, interest payment by both Gless and Century assuming both use the straight-line method. 3. On July 1, 2026, 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 Record the issuance of the bonds by Gless. Note: Enter debits before credits. ......Date... General Journal ... | Debit Debit Cre Credit

Answer 1

Tournal Entry ALL Date General Journal W Debit credit -1-2021 cash 21210000 convertible bonds payable 21000000 premium on bonds payable 219,000 H-2021 Investment in convertible 3150,000 bonds premium on Bond investment 31,500 cash 3,181,500

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