On May 1, 2011, Stone Corporation issued $4 million of 10-year, 6% convertible bonds at 101. The similar bonds without the conversion rights were sold at 97. Interest is to be paid semi-annually on April 30 and October 31. Stone Corporate uses the straight-line method to amortize bond discount. On July 1, 2017, $1 million of bonds were converted into common shares. Stone Corporation uses the residual method in accounting for the issuance of convertible bonds. December 31 is the end of the accounting year (reporting date).

Prepare journal entries needed at 

(1) May 1, 2011; 

(2) December 31, 2012; 

(3) April 30, 2014; 

(4) July 1, 2017.

Answer rating: 100% (QA)

Solution Issued of 6 convertibale bonds 1 On May 12011 Cash AC 4000000 x 101 Dr 404000000 To Premium ... View the full answer