E16-1 (Issuance and Conversion of Bonds) For each of the unrelated transactions described below, present the entry(ies) required to record each transaction. 1. Coyle Corp. issued $10,000,000 par value 10% convertible bonds at 99. If the bonds had not been convertible, the companys investment banker estimates they would have been sold at 95. Expenses of issuing the bonds were $70,000. Cash (10,000,000 x .99) 9,900,000 Discount on Bonds Payable 100,000 Bonds Payable 10,000,000 2. Lambert Company issued $10,000,000 par value 10% bonds at 98. One detachable stock warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $4. Cash (10,000,000 x .98) 9,800,000 Discount on Bonds Payable 600,000 Bonds Payable 10,000,000 Paid-in Capital-Stock Warrant 400,000 *Value of bonds- 10,000,000 x .98 = 9,800,000 *Value of warrants- (10,000,000/100 = 100,000) 100,000 x 4 = 400,000 3. Sepracor, Inc. called its convertible debt in 2012. Assume the following related to the transaction: The 11%, $10,000,000 par value bonds were converted into 1,000,000 shares of $1 par value common stock on July 1, 2012. On July 1, there was $55,000 of unamortized discount applicable to the bonds, and the company paid an additional $75,000 to the bondholders to induce conversion of all the bonds. The company records the conversion using the book value method. Debt Conversion Expense 75,000 Bonds Payable 10,000,000 Discount on Bonds Payable 55,000 Common Stock 1,000,000 Paid-in capital in excess of par 8,945,000 Cash 75,000 *10,000,000 55,000 1,000,000 = 8,945,000 E16-6 (Conversion of Bonds) On January 1, 2011, Trillini Corporation issued $3,000,000 of 10-year, 8% convertible debentures at 102. Interest is to be paid semiannually on June 30 and December 31. Each $1,000 debenture can be converted into eight shares of Trillini Corporation $100 par value common stock after December 31, 2012.

On January 1, 2013, $600,000 of debentures are converted into common stock, which is then selling at $110. An additional $600,000 of debentures are converted on March 31, 2013. The market price of the common stock is then $115. Accrued interest at March 31 will be paid on the next interest date. Bond premium is amortized on a straight-line basis. Instructions Make the necessary journal entries for: (a) December 31, 2012. (b) January 1, 2013. (c) March 31, 2013. (d) June 30, 2013. Record the conversions using the book value method