Question
CONVERTIBLE BONDS Robinson Co. issued $1,000,000 of convertible 10-year debentures on July 1, 2013. The debentures provide for 9% interest payable semiannually on January 1
CONVERTIBLE BONDS
Robinson Co. issued $1,000,000 of convertible 10-year debentures on July 1, 2013. The debentures provide for 9% interest payable semiannually on January 1 and July 1. The discount in connection with the issue was $12,000, which is being amortized monthly on a straight-line basis.
The debentures are convertible after 1 year into seven shares of the Robison Co.'s $1 par value common stock for each $1,000 of debentures.
On August 1, 2014, $100,000 of debentures were turned in for conversion into common stock. Interest has been accrued monthly and paid as due. Accrued interest on debentures is paid in cash upon conversion.
Required: Prepare the journal entries to record:
-the issuance of the bonds
-the monthly interest accrual
-the conversion of the bonds
-the new monthly interest accrual
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