AFM issued 10 year 6% convertible bonds on January 1 , 2014 at 104 . the bonds had a face value of $600,000 and interest was paid twice a year on July 1 and January 1. After two years each $1000 bond could be converted into 50 common shares. the bonds would have been sold for an amount , without the conversion feature to yield a 10% return. On July 1 , 2019 , AFM split its common shares 2:1. On July 2 ,2020 after the interest payment 3/5 the of the bonds were converted into shares. the company uses iFRS , the effective interest method for recording the bond interest and uses the book value method to record conversation.

The journal entry would be on January 1 2019, for bond payable is

a. 600,000

b. 450,545

c. 624,000

d. 360,000

e. 500,000

On December 31 , 2020 the interest expense to be recorded is

a. 30,000

b. 22749

c. 45,045

d. 45,272

e. 50,000

On July 1 , 2020 the number of common shares that would have been issued on conversion of 3/5 of bonds would have been

a. 18,000

b. 60,000

c. 30,000

d. 36,000

e. none of the above

Answer rating: 100% (QA)

the journal entry on July 1 2019 is dr bonds payable 600000 cr cash 600000 the j... View the full answer