On December 31, 2014, Wynn Holdings Ltd. issues 6-percent, 10-year convertible bonds with a maturity value of

Question:

On December 31, 2014, Wynn Holdings Ltd. issues 6-percent, 10-year convertible bonds with a maturity value of $6,000,000. The semiannual interest dates are June 30 and December 31. The market interest rate is 5 percent and the issue price of the bonds is 107.79458. Wynn Holdings Ltd. amortizes any bond premium and discount by the effective-interest method.

Required

1. Prepare an effective-interest-method amortization table for the first four semiannual interest periods.

2. Journalize the following transactions:

a. Issuance of the bonds on December 31, 2014. Credit Convertible Bonds Payable.

b. Payment of interest on June 30, 2015.

c. Payment of interest on December 31, 2015.

d. Retirement of bonds with maturity value of $2,000,000 on July 2, 2016. Wynn Holdings Ltd. pays the call price of 104.00.

e. Conversion by the bondholders on July 2, 2016, of bonds with maturity value of $3,000,000 into 40,000 of Wynn Holdings Ltd. common shares.

3. Prepare the balance sheet presentation of the bonds payable that are outstanding at December 31, 2016.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...