On July 1, 2021, the Rocks Company issued 200, 10%, P10,000bobds at face value. The holder of

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Question:

On July 1, 2021, the Rocks Company issued 200, 10%, P10,000bobds at face value. The holder of each bond is entitled the convert the bond into 80, P100 par ordinary shares of Caltex Company. At anytime up to the bond maturity. When the bonds were issued, the prevailing interest rate for similar instruments without conversion option is 12%. The bonds pay interest annually every June 30. And mature on June 30 2026.

On June 30, 2023l after receiving the annual interest, holders of 120 bonds exercised their conversion privilege. Remaining bonds were retired on maturity date.

Required:
A. Allocate the proceeds from bond issuance between bonds and equity component
B. Prepare entries to record the foregoing.