Question

Exercise 16-04 On January 1, 2019, when its $30 par value common stock was selling for $80 per share, Bramble Corp. issued $12,300,000 of 8% convertible debentures due in 20 years. The conversion option allowed the holder of each $1,000 bond to convert the bond into five shares of the corporation's common stock. The debentures were issued for $13,284,000. The present value of the bond payments at the time of issuance was $10,455,000, and the corporation believes the difference between the present value and the amount paid is attributable to the conversion feature. On January 1, 2020, the corporation's $30 par value common stock was split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2021, when the corporation's $15 par value common stock was selling for $135 per share, holders of 30% of the convertible debentures exercised their conversion options. The corporation uses the straight-line method for amortizing any bond discounts or premiums. (a) Prepare the entry to record the original issuance of the convertible debentures. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Account Titles and Explanation Debit Credit Cash 13284000 Premium on Bonds Pay. 984000

Answer 1

credit . I Answer: Journal Entry :- Date particulars Cash 1 Alc . dr TO Bondy payable To premium on bonds payable Debit $13,284000 $123 09000 $984000