ABCD Company issued a Convertible Bond on 1 January 2019. The following information about the Convertible Bond is available:

• Face Value = $2,500,000; Life: 5 years; Interest: Annual on 31 December;
• Issued at Par
• Stated rate (coupon): 5%;
• Assume an effective rate (Yield) of 6% (this is the rate on equivalent non-convertible bonds)
• Convertible Into: 500,000 Ordinary Shares with a par value of $3 each
• The Present Value (PV) Factor for [N=5 and Yield = 6%] is 0.7473. The Annuity Factor [N = 5 and Yield = 6%] = 4.2124 (use these EXACT figures in your calculations)

1. What is the balance on the Bonds Payable Account on 31 December 2019 after the interest payment is made? (round to two decimal places)

Select one:

a. $2,413,488.00 CREDIT

b. $2,473,045.64 CREDIT

c. $2,523,091.27 CREDIT

d. $2,523,132.00 CREDIT

e. None of these answers

2. What is the correct journal entry with respect to BONDS PAYABLE on 1 January 2019

Select one:

a. CREDIT $2,394,800.00

b. CREDIT $2,676,470.00

c. CREDIT $2,500,000.00

d. CREDIT $2,325,550.00

e. None of these answers