Accounting Problem (Simple)

Instructions

Refer to Background Information to com plete Template1.png and Template2.png

Background Information

On July 1, 2020,FlounderLtd., which follows ASPE,issued1,000convertible, five-year, $1,000 bonds. Each bond is convertible into20common shares at the bondholder's option. On the date of issuance, the bond's conversion rights were valued at $50,000.

On July 1, 2023, the bonds had a carrying value onFlounder's books of $974,000, and the fair market value of the bonds without the convertible option was $979,000.

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Assume all the bondholders voluntarily decided to convert their bonds to common shares on July 1, 2023. Prepare the journal entry to record the conversion. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Account Titles and Explanation Debit CreditAssume instead that Flounder paid the bondholders an incentive of $11000 to convert their bonds to common shares, and that all the bondholders agreed to convert their bonds to common shares on July 1, 2023. Prepare the journal entry.r to record the conversion. [Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Amount TIES and Explanation Debit Credit