On July 1, 2023, Martinez Ltd., which follows ASPE, issued 1,000 convertible, five-year, $1,000 bonds. Each...

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On July 1, 2023, Martinez Ltd., which follows ASPE, issued 1,000 convertible, five-year, $1,000 bonds. Each bond is convertible into 20 common shares at the bondholder's option. On the date of issuance, the bond's conversion rights were valued at $50,000. On July 1, 2026, the bonds had a carrying value on Martinez's books of $971,000, and the fair market value of the bonds without the convertible option was $975,000. (a) Assume all the bondholders voluntarily decided to convert their bonds to common shares on July 1, 2026. Prepare the journal entry to record the conversion. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) On July 1, 2023, Martinez Ltd., which follows ASPE, issued 1,000 convertible, five-year, $1,000 bonds. Each bond is convertible into 20 common shares at the bondholder's option. On the date of issuance, the bond's conversion rights were valued at $50,000. On July 1, 2026, the bonds had a carrying value on Martinez's books of $971,000, and the fair market value of the bonds without the convertible option was $975,000. (a) Assume all the bondholders voluntarily decided to convert their bonds to common shares on July 1, 2026. Prepare the journal entry to record the conversion. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)

Answer rating: 100% (QA)

Answer To record the conversion of the bonds into common shares on July 1 2026 we need to account fo... View the full answer