On January 1 of Year 1, Sierra Corp. issued 950 of its $1,000, 6% convertible bonds...

Transcribed Image Text:

On January 1 of Year 1, Sierra Corp. issued 950 of its $1,000, 6% convertible bonds at face value. Each bond is convertible into 15 shares of $1 par value common stock. In June of Year 3, the company induced the conversion of bonds into common stock by offering $66,500 cash to bondholders, payable upon conversion. All of the bondholders converted to common stock in June of Year 3. a. Provide the entry for issuance of bonds on January 1 of Year 1. b. Provide the entry for conversion of the bonds in June of Year 3 using the book value method. Date Account Name a. Jan. 1, Year 1 Cash Bonds Payable To record the issuance of bonds. b. June, Year 3 Bonds Payable Common Stock Paid-in Capital in Excess of Par-Common Stock Interest Expense Cash To record the conversion of bonds. > > > > > Dr. 0 Cr. 0 0 x oooo 0 0 0 0 0 0 x 0 0 On January 1 of Year 1, Sierra Corp. issued 950 of its $1,000, 6% convertible bonds at face value. Each bond is convertible into 15 shares of $1 par value common stock. In June of Year 3, the company induced the conversion of bonds into common stock by offering $66,500 cash to bondholders, payable upon conversion. All of the bondholders converted to common stock in June of Year 3. a. Provide the entry for issuance of bonds on January 1 of Year 1. b. Provide the entry for conversion of the bonds in June of Year 3 using the book value method. Date Account Name a. Jan. 1, Year 1 Cash Bonds Payable To record the issuance of bonds. b. June, Year 3 Bonds Payable Common Stock Paid-in Capital in Excess of Par-Common Stock Interest Expense Cash To record the conversion of bonds. > > > > > Dr. 0 Cr. 0 0 x oooo 0 0 0 0 0 0 x 0 0