1/1/17, Smith textiles issued 12-year, zero coupon, convertible bonds with a total face value of 7,000,000 ($1,000 per bond). Each bond is convertible into 10 shares of Smith’s $1 par common stock. The convertible bonds were issued for a total of $5,266,215. Without the conversion option, the bonds would have been issued for $3,942,686. On 1/1/17, Smith’s common stock was trading at $50 per share. on 7/31/19, the stock was trading at $89 per share and all the bonds were exchanged for common stock. The unamortized discount on the bonds was $1,400,665 at that date. What is included in the journal entry to record the 7/31/19 exchange of the convertible bonds?

Answer rating: 100% (QA)

In the given case the zero coupon bonds have been issued for a tenure of 12 years Post the 12 year s... View the full answer