1. On 1/1/2014 the Jackson Co. has a $40,000 debt outstanding which matures on 12/31/16. Interest which is payable on Dec. 31 of each year, was last paid on 12/31/13.. Jackson negotiates a restructure in which the 3 remaining interest payments are $2,400 each and the amount to be paid at maturity is $38,739. Using the effective interest method, how much interest expense is recognized on the debt for the year ending 12/31/14?

2. On 1/1/15, the Larson Co. issues a $10,000 bond @103. The bond is convertible into 400 shares on Larson common stock. The fair market value of the shares on the issue date exceeds the face value of the bond. Following GAAP, what market price per share would make this a par bond (i.e. no discount or premium)

3.On January 1,2015, HTL Manufacturing Co. issued $120 million of 8% convertible bonds. due 2035 at 103. Each $1,000 bond is convertible in 40 shares of HTL no par common. The price of HTL shares at the time of bond issue was $30 per share.

A. In recording the bond issue following GAAP, HTL would credit equity by how much?

B. In recording the bond issue, how much discount on bonds payable would be recorded?