E16-1(1,2,3) & E16-2 (a,b)

E16-1 (L01,2) EXCEL (Issuance and Conversion of Bonds) For each of the unrelated transactions described below, present the entry(ies) required to record each transaction. 1. Grand Corp, issued $20,000,000 par value 10% convertible bonds at 99. If the bonds had not been convertible, the com pany's investment banker estimates they would have been sold at 95. 2. Hoosier Company issued $20,000,000 par value 10% bonds at 98. One detachable stock purchase warrant was issued with each $100 par value bond. At the time of issuance, the warrants were selling for $4. 3. Suppose Sepracor, Inc. called its convertible debt in 2017. Assume the following related to the transaction. The 11%, $10,000,000 par value bonds were converted into 1,000,000 shares of S1 par value common stock on July 1, 2017 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. E16-2 (L01) (Conversion of Bonds) Aubrey Inc. issued $4,000,000 of 10%, 10-year convertible bonds on June 1, 2017, at 98 plus accrued interest. The bonds were dated April 1, 2017, with interest payable April 1 and October 1. Bond discount is amor tized semiannually on a straight-line basis. On April 1, 2018, $1,500,000 of these bonds were converted into 30,000 shares of $20 par value common stock. Accrued inter- est was paid in cash at the time of conversion. Instructions (a) Prepare the entry to record the interest expense at October 1, 2017. Assume that accrued interest payable was credited when the bonds were issued. (Round to nearest dollar.) (b) Prepare the entry(ies) to record the conversion on April 1, 2018. (Book value method is used.) Assume that the entry to record amortization of the bond discount and interest payment has been made