Question

que common lue of the bond paymes nd the amount paid is a common stock was so lling for $90 per share corporation uses the str dis was splin per stare, the sur 3. Prepit 114-17 Convertible Bonds On January 1, 2011 LO 14.7 corporation issued S10 million of 10% convertible deben AICPA holder of each $1,000 bond to convert it into six shares of the corporal Adented debentures were issued for SIT million. At the time of issuance, the present value million, and the corporation believes the difference between the present value and the to the conversion feature. On January 1, 2019, the corporation's $30 par value com On January 1, 2020, when the corporation's $10 par value common stock was selling of 40% of the convertible debentures exercised their conversion options. The corpora method for amortizing any bond discounts or premiums. g the book value methods Required: 1. Prepare the journal entry to record the original issuance of the convertible debentures 2. Prepare the journal entry to record the exercise of the conversion option, using the book supporting computations in good form E14-18 Induced Conversion On July 1, 2020. Tuttle Company had bonds payable outstanding LO 14.7 $200,000 and a book value of $194,000. The interest on these bonds was paid on June 30. W were issued, cach $1.000 bond was convertible into 20 shares of $10 par common stock. To indu June 15, 2020, the terms were changed so that cach bond was convertible into 22 shares of conversion was made within 30 days. All the bonds were converted on July 1, 2020, when them common stock was $50 per share. utstanding with a face value ne 30. When these bonis To induce conversion, hares of common stockit en the market price of the Required: Next Level Using the book value method, record the conversion of the bonds on July 1, 2020

14-18

Answer 1

Sol. 14-18 Date Particulars Debit amount Credit amount $200,000 $200,000 $6,000 7/1/2020 Bonds payable a/c To discount on bonds payable a/c ($2000000-$194000) To Common stock a/c ($2000000/1000*22*10) To Add. Paid up capital a/c $44,000 $150,000