the convertible bond was issued on january 2, 2020 with a face value of 5,000,000, a term of 10 years, and it pays inter...
the convertible bond was issued on january 2, 2020 with a face value of 5,000,000, a term of 10 years, and it pays interest each june and december 31 at an annual rate of 4%. the company received 4,600,000 cash; the cash was later used to acquire land and buildings on july 1, 2020 valued at 1,400,000 and 3,200,000 respectively. The remaining 400,000 of convertible bonds was also issued on January 2, 2020, in exchange for equipment valued at $400,000. All other equipment additions recorded on the balance sheet were paid for with cash. There were no disposals of equipment during the year.
Prepare the journal entries and calculations.
Homework Answers
| Date | Account Title | Debit | Credit |
| 2/1/2020 | Cash | $ 4,600,000.00 | |
| Equipment | $ 400,000.00 | ||
| Bonds Payable | $ 5,000,000.00 | ||
| (To record issue of bonds) | |||
| 30/6/2020 | Interest Expense (5000,000 *4% /2) | $ 100,000.00 | |
| Cash | $ 100,000.00 | ||
| (To record payment of interest) | |||
| 1/7/2020 | Land | $ 1,400,000.00 | |
| Building | $ 3,200,000.00 | ||
| Cash | $ 4,600,000.00 | ||
| (To record purchase of Land and Building) |
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