Bridgeport Inc. issued $3,870,000par value, 7% convertible bonds at99for cash. If the bonds had not included the conversion feature, they would have sold for 95.

Showthe journal entry to record the issuance of the bonds. (3 entries)

Account Titles and Explanation Debit Credit

(a)

(b)

(c)

Indigo Corporation issued1,800$1,000bonds at103. Each bond was issued with one detachable stock warrant. After issuance, the bonds were selling in the market at99, and the warrants had a market price of $33.

Use the proportional method to record the issuance of the bonds and warrants. (4 entries)

Account Titles and ExplanationDebitCredit

(a)

(b)

(c)

(d)

On January 1, 2019, when its $30par value common stock was selling for $80per share, Sage Corp. issued $10,400,000of 8% convertible debentures due in 20 years. The conversion option allowed the holder of each $1,000bond to convert the bond into five shares of the corporation's common stock. The debentures were issued for $11,232,000. The present value of the bond payments at the time of issuance was $8,840,000, and the corporation believes the difference between the present value and the amount paid is attributable to the conversion feature. On January 1, 2020, the corporation's $30par value common stock was split 2 for 1, and the conversion rate for the bonds was adjusted accordingly. On January 1, 2021, when the corporation's $15par value common stock was selling for $135per share, holders of 30% of the convertible debentures exercised their conversion options. The corporation uses the straight-line method for amortizing any bond discounts or premiums.

(a) Show the entry to record the original issuance of the convertible debentures. (3 entries)

Account Titles and ExplanationDebitCredit

(a)

(b)

(c)

(b) Show the entry to record the exercise of the conversion option, using the book value method. (4 entries)

Account Titles and ExplanationDebitCredit

(a)

(b)

(c)

(d)