On 1/1/2018, 49er, Inc. issues $10,000,000 of five-year, 1.25% convertible bonds at par. Each $1,000 bond...

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On 1/1/2018, 49er, Inc. issues $10,000,000 of five-year, 1.25% convertible bonds at par. Each $1,000 bond in the issue converts to 40 shares of $1 par value common stock at the option of the bondholder beginning two years after issue. The market price of 49er's common stock on the date of issue is $27 and interest is paid annually each December 31. Assume that half of the bonds were converted on 1/1/2020 and at that date the carrying value (net book value) of the entire issue of convertible bonds is $9,505,904. Required: a. Prepare the journal entry for issuance of 49er's convertible bonds on 1/1/2018. (5 pts) b. Prepare the journal entry for conversion of half of the convertible bonds on 1/1/2020. (7 pts) On 1/1/2018, 49er, Inc. issues $10,000,000 of five-year, 1.25% convertible bonds at par. Each $1,000 bond in the issue converts to 40 shares of $1 par value common stock at the option of the bondholder beginning two years after issue. The market price of 49er's common stock on the date of issue is $27 and interest is paid annually each December 31. Assume that half of the bonds were converted on 1/1/2020 and at that date the carrying value (net book value) of the entire issue of convertible bonds is $9,505,904. Required: a. Prepare the journal entry for issuance of 49er's convertible bonds on 1/1/2018. (5 pts) b. Prepare the journal entry for conversion of half of the convertible bonds on 1/1/2020. (7 pts)

Answer rating: 100% (QA)

26 a 27 Date 28 01012018 Cash 29 30 31 32 b 33 34 35 36 37 38 39 40 41 42 42 43 ... View the full answer