Blossom Inc. issued $6 million of 10-year, 9% convertible bonds on June 1, 2020, at 99 plus accrued interest. The bonds were dated April 1, 2020, with interest payable April 1 and October 1. Bond discount is amortized semi-annually. Bonds without conversion privileges would have sold at 98 plus accrued interest. On April 1, 2021, $1.50 million of these bonds were converted into 30,000 common shares. Accrued interest was paid in cash at the time of conversion. Assume that the company follows IFRS. Your answer is partially correct. Prepare the entry to record the issuance of the convertible bonds on June 1, 2020. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to decimal places, eg. 5,275.) Date Account Titles and Explanation Debit Credit June 1, 2020 Cash 80000 Loss on Redemption of Bonds 16477 MORE INOO Bonds Payable 2034 Interest Payable e Textbook and Media List of Accounts Your answer is partially correct. Prepare the entry to record the interest expense at October 1, 2020, by pro-rating the number of months. Start by calculating the effective rate on the bonds using (1) a financial calculator or (2) Excel functions. Assume that interest payable was credited when the bonds were issued. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round effective interest rate to 4 decimal places, eg. 3.5275% and final answers to decimal places, eg. 5,275.) Date Account Titles and Explanation Debit Credit October 1, 2020 Interest Payable 90000 Interest Expense 182034 DOAN TOMO Cash 270000 Bonds Payable 2034 Prepare the entry to record the conversion on April 1, 2021. (The book value method is used.) Assume that the entry to record amortization of the bond discount and interest payment has been made. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to decimal places, eg. 5,275.) Date Account Titles and Explanation Debit Credit April 1, Bonds Payable 2021 15000000 Loss on Redemption of Bonds Common Shares e Textbook and Media List of Accounts X Your answer is incorrect. Prepare the entry to record the conversion on April 1, 2021. Assume that the entry to record amortization of the bond discount and interest payment has been made by using (1) a financial calculator or (2) Excel functions to calculate the bond discount. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to decimal places, eg. 5,275.) Date Account Titles and Explanation Debit Credit April 1, 2021 e Textbook and Media List of Accounts X Your answer is incorrect. Assume that Blossom follows ASPE. Prepare the entry to record the issuance of the convertible bonds on June 1, 2020 assuming that the equity component is measured at $0. (Credit account titles are automatically indented when the amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit June 1, 2020 e Textbook and Media List of Accounts Your answer is partially correct. What do you believe was the likely fair value of the common shares as at April 1, 2021 (the date of conversion)? et value of the common shares as of the date of the conversion of April 1, 2018 would be higher higher V than $
