On December 31, Year 3, ABC Corporation, a public company, issues ten-year convertible bonds with a...
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On December 31, Year 3, ABC Corporation, a public company, issues ten-year convertible bonds with a face value of $2,000,000 and a stated rate of 8%, paid semi- annually on June 30 and December 31. The bonds mature on December 31, Year 13. The bonds are issued to provide an effective yield of 7%. If these bonds did not have a conversion feature, the company would have to issue the bonds to yield9% to attract investors. On December 31, Year 7, 60% of the bonds are converted to comnon shares. Show ALL calculations and write out account names fully for ANY marks Round to the nearest dollar Required: a) Prepare the journal entry(ies) to record the issuance of the bonds (4 marks) b) Prepare the journal entry(ies) to record the conversion of the bond, December 31, Year 7 (3 marks) On December 31, Year 3, ABC Corporation, a public company, issues ten-year convertible bonds with a face value of $2,000,000 and a stated rate of 8%, paid semi- annually on June 30 and December 31. The bonds mature on December 31, Year 13. The bonds are issued to provide an effective yield of 7%. If these bonds did not have a conversion feature, the company would have to issue the bonds to yield9% to attract investors. On December 31, Year 7, 60% of the bonds are converted to comnon shares. Show ALL calculations and write out account names fully for ANY marks Round to the nearest dollar Required: a) Prepare the journal entry(ies) to record the issuance of the bonds (4 marks) b) Prepare the journal entry(ies) to record the conversion of the bond, December 31, Year 7 (3 marks)
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Facevalue of issued bonds 200000 interest for semi annual period facevalue Stated rate of interest 6... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0324312140
16th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
Posted Date:
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