Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. western world inc. issues $30,000,000 of convertib

Western World Inc. issues $30,000,000 of convertible bonds with each $1,000 bond convertible into 15 shares...

Free

50.1K

Verified Solution

Question

Accounting

Western World Inc. issues $30,000,000 of convertible bonds witheach $1,000 bond convertible into 15 shares of the company’s $1 parcommon stock. The bonds are issued at 102 on January 1, 2019 andpay interest in Jan and July and mature on January 1, 2024. On July1, 2020, 30% of the bonds are converted when the stock price is $80per share and 30% of the bond premium has been amortized.

Record the following transactions:

a. Bond as issuance

b. Conversion of $30,000,000 in bonds to common stock.

Answer & Explanation Solved by verified expert
4.4 Ratings (950 Votes)

Required journal entries are as prepared below:

Year Particulars L.F Debit ($) Credit ($)
2019
a Jan-01 Cash (30,000,000*1.02) 30,600,000
Premium on bonds payable          600,000
Bonds Payable     30,000,000
(For bonds issued at premium)
2020
b Jan-01 Bonds Payable (30,000,000*.3)    9,000,000
Premium on Bonds Payable       126,000
Loss on bonds conversion    1,674,000
Additional paid in capital-common stock (9,000*15*79)     10,665,000
Common Stock (9,000*15*1) 135,000
(For bonds converted into stock)

Working:

Bonds converted into stock
30,000,000*.3    9,000,000
Premium on Bonds converted
600,000*.3 180000
Premium already amortized in 2019
30% of 180,000 54000
Unamortized premium 126000

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!
Become a Member

Other questions asked by students

Finance
1.2K views

Scanlon plans represent a? group-level incentive plan that provides payouts based on whether the implementation of...

Statistics
1.2K views

Suppose that Xi’s are coming from a normal population with a mean μ =10 and known...

Programming
1.2K views

Question 1 price is an instance variable of a class. Inside that class there is a method...

Basic Math
1.2K views

For this problem, carry at least four digits after the decimal in your calculations. Answers may...

Geometry
1.2K views

5 6B The parabola in the image has its focus Select ALL of the TRUE...

Geometry
1.2K views

Finding Angle Measures Find the measures of the angles labeled i MZEFD 90 0

Geometry
1.2K views

u represents the letter Select one O a mu O b theta c beta O...

Calculus
1.2K views

Graph the function over a one period interval y cot 2x Which graph below shows...

Accounting
1.2K views

Lymen International is considering a significant expansion to its product line. The sales...

Accounting
1.2K views

Sheet Printing Supply of Baltimore has applied for a loan. Its bank has requested a...

Accounting
1.2K views

Maxim Corporation has provided the following information about one of its products: During the year,...

Accounting
1.2K views

I am sorry if its blurry I cant do much about it, to me they...