On January 1, 20x1, an entity issues bonds with face amount of P5,000,000 for P5,200,000. The bonds mature on December 31, 20x3 and pay annual interest of 12%. The bonds can be converted into 10,000 ordinary shares of the entity with par value per share of P200. On January 1, 20x1, the bonds are selling at 101 without the conversion feature. The effective interest rate on the bonds is 11.59%. All of the bonds are converted into ordinary shares on January 1, 20x3. CONVERTIBLE BONDS - CONVERSION Use the facts in the immediately preceding problem. However, in this case, the entity retires the bonds on January 1, 20x3 at a call premium of $200,000. Without the conversion feature, the bonds are selling on this date at 102. Requirement: Provide the entry to record the retirement of the bonds.
On January 1, 20x1, an entity issues bonds with face amount of P5,000,000 for P5,200,000. The bonds mature on December 31, 20x3 and pay annual interest of 12%. The bonds can be converted into 10,000 ordinary shares of the entity with par value per share of P200. On January 1, 20x1, the bonds are selling at 101 without the conversion feature. The effective interest rate on the bonds is 11.59%. All of the bonds are converted into ordinary shares on January 1, 20x3. CONVERTIBLE BONDS - CONVERSION Use the facts in the immediately preceding problem. However, in this case, the entity retires the bonds on January 1, 20x3 at a call premium of $200,000. Without the conversion feature, the bonds are selling on this date at 102. Requirement: Provide the entry to record the retirement of the bonds.
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter7: Financial Activities
Section: Chapter Questions
Problem 10QE
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On January 1, 20x1, an entity issues bonds with face amount of P5,000,000 for P5,200,000. The bonds mature on December 31, 20x3 and pay annual interest of 12%. The bonds can be converted into 10,000 ordinary shares of the entity with par value per share of P200. On January 1, 20x1, the bonds are selling at 101 without the conversion feature. The effective interest rate on the bonds is 11.59%. All of the bonds are converted into ordinary shares on January 1, 20x3.
CONVERTIBLE BONDS - CONVERSION
Use the facts in the immediately preceding problem. However, in this case, the entity retires the bonds on January 1, 20x3 at a call premium of $200,000. Without the conversion feature, the bonds are selling on this date at 102.
Requirement: Provide the entry to record the retirement of the bonds.
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