(Conversion of Bonds) The December 31, 2010, balance sheet of Osygus Corp. is as follows. 10% callable,...

Question:

(Conversion of Bonds) The December 31, 2010, balance sheet of Osygus Corp. is as follows.

10% callable, convertible bonds payable (semiannual interest dates April 30 and October 31;

convertible into 6 shares of $25 par value common stock per $1,000 of bond principal;

maturity date April 30, 2016) $600,000

Discount on bonds payable 10,240 $589,760

On March 5, 2011, Osygus Corp. called all of the bonds as of April 30 for the principal plus interest through April 30. By April 30 all bondholders had exercised their conversion to common stock as of the interest payment date. Consequently, on April 30, Osygus Corp. paid the semiannual interest and issued shares of common stock for the bonds. The discount is amortized on a straight-line basis. Osygus uses the book value method.

Prepare the entry(ies) to record the interest expense and conversion on April 30, 2011. Reversing entries were made on January 1, 2011.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Bonds
When companies need to raise money, issuing bonds is one way to do it. A bond functions as a loan between an investor and a corporation. The investor agrees to give the corporation a specific amount of money for a specific period of time in exchange... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...