Closed Tech Ltd. issued convertible bonds on 1 July 20X8. The 15-year, 4% $12,750,000 bonds pay...

   

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Closed Tech Ltd. issued convertible bonds on 1 July 20X8. The 15-year, 4% $12,750,000 bonds pay interest semi-annually each 30 June and 31 December. At the investor's option, each $1,000 bond is convertible into 50 common shares on the bond's maturity date. (PV of $1. PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Bond market analysts indicated that if the bonds had not been convertible, they would likely have sold to yield 6%, and have raised $10,251,000. They were, in fact, issued for $13,250,000 Required: 1. Provide the journal entry to record the initial issuance of the bond. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round time value factor to 3 decimal places.) View transaction list Journal entry worksheet Record the entry for issuance of bonds. Net Drilar debefore credits. Transaction General Journal Debit rou Credit HIE Nove ensive Assessment i 2. Provide the entry to record interest at 31 December 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round time value factor to 3 decimal places.) View transaction list Journal entry worksheet < 1 Record the interest expense on the bond. Note Enter debits before credits. Transaction Record entry General Journal Clear entry Seved Debit Credit View general journal 3. Prove that the $10,251,000 reference price provides a yield of 6% by establishing the present value of the bond. Allow for rounding (Round time value factor to 3 decimal places.) Present value of principal Present value of interest Price Closed Tech Ltd. issued convertible bonds on 1 July 20X8. The 15-year, 4% $12,750,000 bonds pay interest semi-annually each 30 June and 31 December. At the investor's option, each $1,000 bond is convertible into 50 common shares on the bond's maturity date. (PV of $1. PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Bond market analysts indicated that if the bonds had not been convertible, they would likely have sold to yield 6%, and have raised $10,251,000. They were, in fact, issued for $13,250,000 Required: 1. Provide the journal entry to record the initial issuance of the bond. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round time value factor to 3 decimal places.) View transaction list Journal entry worksheet Record the entry for issuance of bonds. Net Drilar debefore credits. Transaction General Journal Debit rou Credit HIE Nove ensive Assessment i 2. Provide the entry to record interest at 31 December 20X8. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round time value factor to 3 decimal places.) View transaction list Journal entry worksheet < 1 Record the interest expense on the bond. Note Enter debits before credits. Transaction Record entry General Journal Clear entry Seved Debit Credit View general journal 3. Prove that the $10,251,000 reference price provides a yield of 6% by establishing the present value of the bond. Allow for rounding (Round time value factor to 3 decimal places.) Present value of principal Present value of interest Price

Answer rating: 100% (QA)

Ars 1 The Journal entery to record the initial issuance of the ... View the full answer