Kellogg Imaging Ltd. issued $7,500,000 of 8.5-percent, 15-year convertible bonds payable on July 1, 2014 at a
Question:
Kellogg Imaging Ltd. issued $7,500,000 of 8.5-percent, 15-year convertible bonds payable on July 1, 2014 at a price of 97.0. Each $1,000 face amount of bonds is convertible into 50 common shares. On December 31, 2015, bondholders exercised their right to convert the bonds into common shares.
Required
1. What would cause the bondholders to convert their bonds into common shares?
2. Without making journal entries, compute the carrying amount of the bonds payable at December 31, 2015. Kellogg Imaging Ltd. uses the straight-line method to amortize bond premium or discount on an annual basis.
3. All amortization has been recorded properly. Journalize the conversion transaction at December 31, 2015.
Step by Step Answer:
Accounting
ISBN: 978-0132690089
9th Canadian Edition volume 2
Authors: Charles T. Horngren, Walter T. Harrison Jr., Jo Ann L. Johnston, Carol A. Meissner, Peter R. Norwood