Question: For each of the unrelated transactions described below present the entry

For each of the unrelated transactions described below, present the entry (ies) required to record each transaction.
1. Luther Corp. issued $50,000,000 par value 8% convertible bonds at 102. If the bonds had not been convertible, the company’s investment banker estimates they would have been sold at par. Expenses of issuing the bonds were $750,000.
2. Luther Corp. issued $35,000,000 par value 12% bonds at 101. One detachable stock purchase warrant was issued with each $1,000 par value bond. At the time of issuance, the warrants were selling for $6.50.
3. On October 31, 2014, Luther Corp. called its 10% convertible debentures for conversion. The $60,000,000 par value bonds were converted into 600,000 shares of $1 par value common stock. On October 31, there was $155,000 of unamortized premium applicable to the bonds, and the company paid an additional $355,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method.

  • CreatedJune 07, 2013
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