Shields Corporation sells $$5,000,000$ of $8\%$ convertible bonds on July $1,2014$ for $$5,350,000.$ The bonds mature on July $1,2029$ and pay interest semi$-$annually on July $1$ and December $31.$ Each $$1,000$ bond is convertible into $50$ common shares at the investor$$s option at maturity. The market $($yield$)$ rate is $9\%.$

 

 a$)$  Calculate the stated conversion price? $\mathrm{}$$$ 

 

 

 b$)$ Prepare the journal entry at issuance using the incremental method. $\mathrm{}$$$ 

 

 

 c$)$ Investor$$s decided to convert all of their bonds at maturity on July $1,2029$ after interest is paid. Record the conversion. $\mathrm{}$$$ 

Answer rating: 100% (QA)

a The stated conversion price can be calculated by dividing the face value of the bond 1000 by the number of common shares each bond is convertible in... View the full answer