Allied Co. issued $10 million of 5 -year, 10% convertible bonds on January 1,2020 at...
70.2K
Verified Solution
Link Copied!
Question
Accounting
Allied Co. issued $10 million of 5 -year, 10% convertible bonds on January 1,2020 at 98 . Interest is payable on January 1 and July 1 and the bond discount is amortized semi-annually. Bonds without conversion privileges would have sold at 95. On January 1,2021,$2.5 million of these bonds were converted into 50,000 common shares. Accrued interest was paid at the time of conversion. Assume that the company follows IFRS. Instructions: a. Prepare the entry to record the issuance of the convertible bonds on January 1,2020. b. Prepare the entry to record the interest expense at July 1, 2020. Hint: You will need to start by calculating the effective interest rate on the bonds. Round the effective rate to four decimal places. c. Prepare the entry(ies) to record the conversion of the bonds on January 1, 2021. Assume that the entry to record the amortization of the bond discount and interest payment has already been made. Round percentages to four decimal places. Round final amounts to the nearest dollar. Show ALL calculations for full marks
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
