201 21 2017, Lin Company issued a convertible bond with a par value of $100,000 in...

 

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201 21 2017, Lin Company issued a convertible bond with a par value of $100,000 in the market for $120,000 the bonds are convertible into 20,000 ordinary shares of $1 per share par value. The bond has a 5-year life and has a interest rate of 10% payable annually. The market interest rate for a similar non-convertible bond at January 1, 2017, The liability component of the bond is computed to be $107,986 (present value). The following bond amortization schedule is provided for this bond. Date 1/1/17 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 Cash Paid $10,000 10,000 10,000 10,000 10.000 EFFECTIVE-INTEREST METHOD 10% BOND DISCOUNTED AT 8% Interest Expense $8,639 8.530 8,412 8,285 8,148 Premium Amortized $1,361 1,470 1,588 1,715 1,852 equirement: 1. Prepare the journal entry to issue the bonds on Jan 1s 2017? Carrying Amount of Bonds $107,986 106,625 105,155 103,567 101,852 100,000 2. Prepare the journal entry to record the interest expense on Dec 31st 2018? 3. Assuming that bonds were converted into ordinary shares on Dec 31st 2019. Prepare the journal e 4. Assuming that bonds were repurchased on Dec 31st 2018 where the fair value of the conv 110,000, while the fair value of the liability component was 105,000. Prepare the journal entry 5. Assuming that bonds were held till maturity date. Prepare journal entries to pay the inte principal amount? 5 201 21 2017, Lin Company issued a convertible bond with a par value of $100,000 in the market for $120,000 the bonds are convertible into 20,000 ordinary shares of $1 per share par value. The bond has a 5-year life and has a interest rate of 10% payable annually. The market interest rate for a similar non-convertible bond at January 1, 2017, The liability component of the bond is computed to be $107,986 (present value). The following bond amortization schedule is provided for this bond. Date 1/1/17 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 Cash Paid $10,000 10,000 10,000 10,000 10.000 EFFECTIVE-INTEREST METHOD 10% BOND DISCOUNTED AT 8% Interest Expense $8,639 8.530 8,412 8,285 8,148 Premium Amortized $1,361 1,470 1,588 1,715 1,852 equirement: 1. Prepare the journal entry to issue the bonds on Jan 1s 2017? Carrying Amount of Bonds $107,986 106,625 105,155 103,567 101,852 100,000 2. Prepare the journal entry to record the interest expense on Dec 31st 2018? 3. Assuming that bonds were converted into ordinary shares on Dec 31st 2019. Prepare the journal e 4. Assuming that bonds were repurchased on Dec 31st 2018 where the fair value of the conv 110,000, while the fair value of the liability component was 105,000. Prepare the journal entry 5. Assuming that bonds were held till maturity date. Prepare journal entries to pay the inte principal amount? 5

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1 Date Accounts Debit Credit Jan 1 2017 Cash 120000 10 Convertible Bonds 107986 Share Premium E... View the full answer