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Originally issued $4,000,000 in bonds at $4,400,000 but have amortized $160,000 of the premium since issuance....

  1. Originally issued $4,000,000 in bonds at $4,400,000 but have amortized $160,000 of the premium since issuance. We wish to retire 70% of the bond issue at the current market price of 120. Make the necessary entry to retire the bonds.
  1. Originally issued $1,000,000 in bonds and current premium balance is $40,000. Each $1,000 bond converts to 10 shares of $5 par common stock. Current market value of stock is $120 per share. If all 1,000 bonds are converted to common stock, prepare the necessary entry.
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Answer #1

Bonds payable account ... Dr. 28,00,000

Premium on redemption account...Dr 168,000

Loss on redemption account ... Dr. 392,000

To Bank account 33,60,000

Bonds payable account ... Dr. 1,000,000

To common stock account 50,000

To securities premium account. 950,000

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